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Upd: Greeks to wear an IMF-tailored suit worth 1,8 billion euro

Additional and harder austerity measures are on the way as the Finance Ministry is obliged to fill up the black hole  that appeared in state revenues in the first two months of the year. Ten millions of Greeks will see themselves forced in one and only  IMF-tailored suit worth 1,8 billion euros in the year 2011. 

Fin Min George Papaconstantinou called for increase of revenues and restrain of expenditures and urges privatizations of state-run enterprises and exploitation of state assets , while his aides struggle over drafts on macro-economic scenarios however the micro-economic tsunami to hit the citizens seems rather imminent.

However the ambitious privatization and state assets program is not estimated to bring soon the missing revenues, as the planning of the program will last until summer.

According to the data available for the State Budget execution for the two months January – February 2011, on a fiscal basis, the State Budget deficit is € 55 million lower than the target set in the 2011 Budget for the first two months of the year. The two first months 2011 State Budget deficit amounts at € 1,024 million compared to a € 1,076 million target. (read more here

How will these additional measures look like?

The additional measures scenario is still on the planning, however its materialization is only a matter of time. According to Greek media the Finance ministry considers for the year 2011:

– Special contributions to come from enterprises, income holders and owners of real estate; that would be the 6th ‘special contribution’ within 18 months

-Arrangements for mature debts holders

-Decrease in Tax exemptions regulations according to income criteria

– Expenditure cuts in state-run enterprises (DEKO) and social security/pension institutions

– Trimming in civil servants benefits

-Trimming of social benefits for jobless, low pensioners and welfare beneficiaries according to  income & assets criteria

– A possible Value Added Tax increase fro items currently at 13% up to 23% – it ill affect food items

In short: While the government  shows incompetence to combat tax evasion and do radical ‘haircut’ in state expenditures,  it keepts a huge army of civil servants and lacks an effective mechanism to collect taxes. The ‘usual suspect’, the average citizen, the employee and the pensioner is being called again to pay the bill and fill up the black holes in the state revenues just because he is an easy and controlled – see: documented – target.  The average Greek citizen is spoofed and thus by 15 different contributions ways.

At the same time, the additional measures, even their leackage to the press, creates concerns and psychological panic to those who have already given all they had. Unemployment is at 14,5% and  predictions shows a rise at 16% for 2011, according to data of the Bank of Greece. “Special contributions” for enterprises? Ha! I want to see just one single businessman willing to hire …

There is something wrong in the economics policy and its application and you don’t need to be an Economist with PhD to understand this.


Read more on Greek FinMin Tuesday’s statements here 

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