04 March 2013

Kathimerini: Greek spending cuts to add up to nearly €40 billion in 2009-14

Greece's fiscal streamlining is dependent on unprecedented expenditure cuts, as - following the €27 billion reduction from 2009 to 2012 - another €12 billion will be cut by 2014, bringing the total amount cut to almost €40 billion within five years.

At the same time, despite successive tax measures applied from 2009, revenues are expected to show a contraction of some €9 billion by end-2014.

These figures reveal why Greece’s creditors are adamant there should be no additional tax measures, with all avenues being explored on the expenditure side instead. Yet given that there is no margin for further cuts in salaries, pensions and social benefits, the troika – as the representatives of the European Commission, the European Central Bank and the International Monetary Fund are collectively known – has focused its attention on the closure of state agencies and the abolition of various structures that will lead to a reduction in the number of civil servants.

In the next two years, up until the end of 2014, the trend will be reversed: Expenditure on salaries will be reduced by an additional €2 billion, while spending on social benefits etc. will go down by €6.6 billion. In total, salaries, pensions and benefits will shrink by €19.8 billion from 2009 to 2014, out of which €10.8 billion will affect social benefits and €9.3 billion salaries. Operating and consumer expenditure will decrease by a total of €11.2 billion, while the reduction in investment amounts to €4.9 billion, dropping to just 40 per cent of the amount invested in 2009.

As a result, the spending cuts will add up to €38.6 billion at the end of 2014 as total expenditure will amount to €86.1 billion, down from €124.7 billion at end-2009.

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© Kathimerini