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Parliamentary Budget Office: Tax hikes “snip” Growth, private arrears almost equal to public debt

The report of the Parliament Budget Office is anything but optimistic. The analysts note among others that Greece pays for the bad choices made in the first half of 2015 and that now the country is under strictest supervision and financial control by the lenders than in the loan agreements before. They also stress that the government budget for 2017 focuses on a tax-centered austerity.

The private debt (arrears to banks, government and social security funds) increases uncontrollably and has reached the level of the public debt which is 328billion euros.

debts to social security funds are approximately 25 billion euros

debts to tax offices are approximately 1.1billion euros per month in the first 8 months of the year.

The GDP for 2016 has been decreased by 0.3% because:

– Exports decreased mainly due to capital controls, high taxes and delayed tax refunds from the state
– Private consumption fell due taxes and uncertainty
– Uncertainty makes entrepreneurs reluctant
– Privatizations have been delayed – they would offer a investment breath and banks have not yet solved the problem of non-performing loans, which limits their ability to finance the real economy.
– Increase of tourism arrivals  in 2016 was not enough to reverse the initial trends.

The government and the Bank of Greece almost expect rapid growth in 2017 at 2.7% of GDP. The optimistic forecast is reflected also in Draft Budget 2017 (October 2016).

“However the data we have do not allow this optimism, the analysts note. They warn of dangers the Greek economy will face in the very near future:

sustainability of social security funds, especially the fund for self-employed and freelancers OAEE.

increase of arrears towards the public administration

decreases of social welfare benefits and allowances

sustainability of public transport companies

Varoufakis’ “deal” brought Greece a step before exiting the euro and brought back the downturn in the economy at a time when the rest Europe achieves growth rates.

It is the 3-monthly report published by the Greek Parliament Budget Office for July-September 2016.

The whole report – 67 pages – here in Greek in pdf

PS not that we will need an official report to confirm how bad the real life is….

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7 comments

  1. I have to disagree strongly here: there is no “Varoufakis deal” which brought back the downturn in the economy or any other evil so conveniently attributed. It is the – as it were – PM who consciously ignored Varoufakis and made the deal to devastate the country, all for a fistful of euros in his and his buddies pockets.

    • Well, what happened is that the ECB refused to finance the Greek banking system leading to the imposition of capital controls, in order to stem capital outflows which had been going on anyway, but accelerated with the political confrontation between Greece and Germany. You can place blame wherever you like, but clearly a lot of it goes to the ECB and Germany.

      • I do wish the Euro would hurry up and collapse before it destroys the rest of Europe.

      • Well,the weapons and actions of the 4th Reich and of their subservient ECB were known and fully expected; their purpose was (and still is) to destroy and ruin the country. It is the calamitous PM and his court who betrayed and surrendered instead of mounting the defence; Varoufakis and Galbraith had the ammunition prepared.

        • The late Nicholas Ridley (Lord Ridley) described monetary union as ‘a German racket to take over Europe’. How right he was. You Greeks ought never to have joined the cursed project and you should have left when you had the chance. Tsipras should have grown a pair and done what was right for his country, instead he gave in to the Germans.

  2. Varoufakis was over-ruled, by Tsipras. All three comments, so far, are correct. A lot of Greece’s history is becoming folk-lore, including this Varoufakis incident. Trotted out in public without recourse to the facts.