Greece vows growth, tax cuts
October 6, 2014
The Greek economy will emerge from six years of economic depression this year and grow by 2.9 percent in 2015, the finance ministry said Monday as it unveiled its 2015 budget in Athens.
Deputy Finance Minister Christos Staikouras promised the debt-wracked country would log the country's first growth - 0.6 percent - since the economic crisis began. He also promised tax breaks, including the abolishment of an unpopular bailout tax known as the solidarity charge.
"This is the result of unprecedented sacrifices made by Greek society, households and businesses," Staikouras said.
But he noted that unemployment in Greece was likely to stay uncomfortably high, averaging 27 percent this year before gradually declining.
Prime Minister Antonis Samaras' conservative coalition has said it plans to begin weaning the debt-wracked country off painful austerity measures demanded by international creditors in exchange for its 240 billion-euro ($303-billion) bailout - a promise that some see as a ploy to boost its popular support.
"The draft budget is politically motivated - the whole point is for the government to boost its ever-waning popularity," Megan Greene, chief economist at Manulife Asset Management, told the Associated Press.
The budget foresees a surplus - excluding interest payments - of 2.9 percent of gross domestic product next year, just short of the 3 percent target set under Greece's bailout deal. Debt is also expected to drop to 168 percent of GDP in 2015, from 175 percent this year.
The government is under pressure to ease austerity measures ahead of a likely early general election. The budget calls for a 30 percent reduction in taxes on both heating oil and a special "solidarity" surcharge imposed during the crisis.
Greece's radical left-wing SYRIZA movement is leading in opinion polls. It opposes the bailout agreement and argues the country's debt load is too high to permit recovery.
Samaras is set to call a vote of confidence in his government this week to fend off the threat of snap elections.
sgb/cjc (Reuters, AP)