November 30, 2022

News Cymru

Two sides to every headline

Reuters carried an in-depth article in July of 2011, I have pasted it in below.

Basically it shows that the plan put forward by Papandreou and Venizelos will guarantee that Greek GDP will continue to shrink until 2015.

By my own estimates, looking at the current rate of contraction of the Greek economy, a fall in Greek GDP by at least 5% year on year until 2015 looks entirely likely and perhaps optimistic with 7% year on year drops feasible.

Looking at 5 % drops since 2008 until 2015, it will mean that by 2015 the Greek economy will have shrunk by 27% from 2008. If that doesn’t strike fear into the hearts of Greeks I do not know what will.

The reason for the year on year drops in Greek GDP?

The government is going to continue to increase taxes while at the same time reducing government spending. A 5-year-old child can understand if you take money out of a pot and you do not put it back the amount of money in the pot will get smaller.

Apparently Venizelos and Papandreou understand less about economics than 5 year olds.

But to cap it off, Papandreou and Venizelos actually claim that Greek GDP will start tin increase before 2015. While looking for some figures to back up my assertions I found this page, which now looks massively optimistic even though author, I believe was trying to give a balanced forecast.

This forecast also missed one crucial aspect and that is explaining how new money would come into Greece given that the Greek banks are not lending and the Greek government can no longer borrow money.

Even the IMF is delusionaly optimistic and they are supposed to know what they are talking about

Unfortunately Greece has only one direction to go and that is down unless taxes are slashed and the country defaults big.

(Reuters) – Greece and its international lenders agreed late on Thursday to revise the country’s five-year austerity plan to include more tax increases and less spending cuts.

The revised 2011-2015 fiscal plan, the key to unlock further EU-IMF loans for the debt-laden country, was submitted to parliament on Friday.

It includes a total 28.4 billion euros of fiscal measures, 155 million euros more than in an initial version of the plan unveiled earlier this month.

The revised plan foresees a total 14.32 billion euros of spending cuts, about 490 million euros less than in the previous version. It also calls for 14.09 billion euros of tax measures, 649 million euros more than in the initial version.

Here are the main measures and targets, as presented by the Greek Finance Ministry in a document obtained by Reuters. The privatization targets were set out in an EU/IMF document obtained by Reuters earlier this month.

FISCAL PLAN

* TAX INCREASES: taxes will increase by 2.32 billion this year, with additional taxes of 3.38 billion euros in 2012, 152 million euros in 2013 and 699 million in 2014.

This includes an 1.38 billion euro “solidarity levy” charged this year on households, ranging between 1 and 5 percent of income. Other measures include the lowering of the tax-free threshold to 8,000 euros from 12,000 euros, higher property taxes, legalization of unauthorized buildings, a VAT rate hike on restaurants and bars to 23 from 13 percent, and luxury levies on yachts, pools and cars. The government also wants to scrap a string of tax exemptions.

* CUTTING THE PUBLIC SECTOR WAGE BILL: 770 million euros in 2011, and 600 million in 2012, 448 million in 2013, 300 million in 2014 and 71 million in 2015.

The reduction will come from a curb on hirings and allowance cuts, as well as by shedding all public sector workers employed under temporary contracts. The government will replace only 1-in-10 civil servants who retire this year and 1-in-5 in coming years.

* CUTS IN SOCIAL BENEFITS: 1.09 billion euros this year, 1.28 billion in 2012, 1.03 billion in 2013, 1.01 billion in 2014 and 700 million in 2015.

Reduction will mainly come by means-testing beneficiaries and cutting a string of benefits.

* INCREASE SOCIAL CONTRIBUTION RECEIPTS: 629 million euros this year, 259 million in 2012, 714 million in 2013, 1.14 billion in 2014 and 504 million in 2015.

To be achieved through an increase in social security contributions and by cracking down on contribution evasion and undeclared labor.

* CLOSE/MERGE PUBLIC ENTITIES AND SUBSIDIES: 490 million in 2011, with further 700 million euros in savings in 2012-2015.

* FIGHTING TAX EVASION: 878 million euros in 2013, 975 million in 2014 and 1.15 billion in 2015.

* CUTS IN PUBLIC INVESTMENT SPENDING: 850 million euros this year (150 million euros more than in previous version of the plan)

* Defense CUTS: 200 million euros in 2012, and 333 million euros each year in 2013-2015.

* CUTS IN HEALTHCARE SPENDING: 310 million euros this year and a further 1.81 billion euros in 2012-2015, mainly by lowering regulated prices for drugs and widening the use of e-prescriptions.

* OTHER MEASURES include savings in state-owned enterprises and cuts in subsidies to local government. Warning: Unrecognized block ‘Divider’

PRIVATISATIONS

The government aims to raise a total of 50 billion euros from privatizations by 2015.

Here are some key sales:

2011

* Greece aims to get 5 billion euros by selling stakes in betting monopoly OPAP, lender Hellenic Postbank, port operators Piraeus Port and Thessaloniki Port as well as Thessaloniki Water among others.

Greece earlier this month agreed to sell a 10 percent stake in Hellenic Telecom (OTE) to Germany’s Deutsche Telekom. The government exercised its “put” option to sell the stake for around 400 million euros.

2012

* The government plans to raise 10 billion euros by selling stakes in Athens Water, refiner Hellenic Petroleum, electricity utility PPC, lender ATEbank as well as ports, airports, motorway concessions, state land and mining rights.

2013-2015

* Plans are to raise 7 billion euros in 2103, 13 billion in 2014 and 15 billion in 2015 with property sell-offs, and yet more stakes in ports, airports and highways.

(Writing by Harry Papachristou; editing by Ron Askew)

 

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