Hellenic Stability and Growth Programme

 

Athens, 15 January 2010

 

The SGP describes an important fiscal consolidation effort, aimed to bring the deficit as a percentage of GDP below 3% by 2012 and is underpinned by an ambitious programme of structural reforms in budget design and execution, expenditure controls, the tax system, social security, policies to create conditions for sustainable growth, promote private sector development and create a more transparent and efficient public administration.

 

The fiscal consolidation effort is front-loaded, with a 4 percentage point deficit reduction in 2010, drawing from both expenditure cuts and revenue increases and mostly from measures of a permanent nature. Public debt is expected to stabilize in 2011 and start declining thereafter. The specific and quantified measures for the fiscal consolidation effort in 2010 are fully described in the report.

 

Examples of specific measures described in the SGP for 2010 include a 10% cut in wage entitlements in the public sector, a hiring freeze for 2010 followed by a 5:1 rule (one person hired for every five retirements) from 2011 onwards, the termination of a large number of short-term contracts in the public sector, a 10% reduction in operating expenditures for line Ministries, a 10% reduction in the budget item relating to social security and pension funds, as well as a significantly declining path for military expenditures up to 2013. On the revenue side, the SGP foresees important tax revenue increases from the abolition of autonomous taxation as well as of tax exemptions in the new tax bill, and increases in the excise tax for alcohol and tobacco.

 

The report also details the initiatives that the Greek government has already undertaken or is planning to undertake in order to restore the credibility of Greek statistics and data, as well as strengthen its medium-term effort to overhaul the budget process, ensure permanent expenditure reductions, and create a fairer and more effective tax system.