The Greek government on Monday submitted to parliament its 2013 budget draft which contains new spending cuts worth $9.4 billion (7.3 billion euros), aimed at slashing deficits.
As the draft was unveiled, the government resumed talks with representatives of international lenders to finalize the 13.5 billion euros austerity and reform package for 2013-2014 needed to secure the release of further bailout loans to debt-crippled Greece.
According to the budget draft, the government foresees a primary surplus of 1.1 percent of GDP or 2.2 billion euros in 2013 for first time after almost a decade, but also the continuation of recession and rising unemployment.
The Greek Finance Ministry estimates the Greek economy will contract by 3.8 percent next year down from 6.5 percent in 2012, remaining in recession for a sixth consecutive year.
Unemployment, according to the same estimates, will reach about 24.7 percent from 23.5 percent on average throughout 2012.
The deficit is expected to stand at 6.6 percent of GDP or 13.3 billion euros this year, down from 9 percent or 19.4 billion euros in 2011. It is expected to be reduced to 4.2 percent of GDP or 8 billion euros in 2013.
According to the 2013 draft budget, which unveils for first time the bulk of fresh austerity measures under discussion with lenders over the past few weeks, the government aims to save approximately 1.1 billion euros from cuts on salaries of civil servants and 3.8 billion euros from cuts on pensions.
In addition, according to the Greek national news agency AMNA, the draft contains 374 million euros of cuts in welfare benefits, 803 million euros of cuts in the health sector, 304 million euros of cuts in defence and 132 million euros of cuts in education.
A total of 483 million euros are expected to be saved from the restructuring of the public sector and an additional 100 million euros from the restructuring of local administration services.
The government aims to raise revenues from the overhaul of the tax system and raises the retirement age from 65 to 67 years.
More details on the measures are expected to be released in the following days, as the government continues negotiations with auditors of the European Commission, the European Central Bank and International Monetary Fund.
Shortly before tabling the draft budget, Greek Finance Minister Yannis Stournaras held a round of talks with the inspectors in Athens, while Greek Prime Minister Antonis Samaras is due to receive them later on Monday.
According to Greek media reports, the government expects to clinch a final agreement on the 13.5 billions euro package containing spending cuts and tax hikes by the weekend, so that auditors who held talks with the government in September, submit a positive report on the progress of Greek economy in time for an EU summit on Oct. 18.
Athens hopes to secure during the summit the green light for the disbursement of 31.5 billion euros in new bailout aid and an extension of the tough fiscal adjustment period by two years to 2016 to ease the pain on the average Greek household and enterprise and break the circle of recession.
According to the same reports, auditors have accepted measures worth some 10 billion euros agreed by partners of Greece's three- month coalition government, but insist on more measures to secure the success of the plan such as the dismissal of thousands of civil servants, which has been opposed by the centre-Left coalition junior partners.
The inspectors, according to Greek media, have raised doubts about the structural reforms the government promises. Since the past two years Athens, has pledged to proceed with necessary reforms to kickstart growth, but is lagging behind.
Without the new loans Greece is threatened with a chaotic disorderly bankruptcy and potential exit from the eurozone which could harm the entire eurozone.
Despite continuing strong reactions by labor unions and opposition parties who note that austerity fuelled recession since 2010, political analysts in the Greek capital expect that the budget draft and the total package of fresh austerity and reform policies will be sealed by the assembly in coming weeks and months.
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