Greek government submits 2011 Βudget to Parliament

 

  • 2011 Budget continues agressive fiscal consolidation effort.
  • Aim is to reduce the deficit by 5 billion euro to 7,4 % of GDP in 2011.
  • During 2010 deficit estimated to decline by an unprecedented  6 percentage points of GDP (from 15,4 to 9,4% of GDP).
  • Despite the upwards revision of 2009 deficit and debt data by Eurostat, the 2010 deficit reduction exceeds that planned - 6 percentage points or over 14 billion euro, higher than the 5,5 percentage points initially planned.
  • 2011 deficit reduction is based on concrete measures cutting expenditures and increasing revenues totalling 14 billion euro.
  • Μeasures include an increase in the lower VAT rate from 11 to 13%, a levy on highly profitable forms, cuts in government operating expenditures, a nominal pension freeze.
  • It also includes significant reductions in operational and wage costs of loss-making public enterprises, in health costs, defense spending and introduces means-testing for social benefits.
  • The economy is set to contract by 3% in 2011, slightly higher than the original 2,6% forecast, following a 4,2% decline in 2010.
  • The 2011 budget also includes measures aimed at jumpstarting economic activity, including a reduction in the tax rate of non- distributed corporate profits from 24 to 20%, as well as a reduction in VAT for the tourism sector from 11 to 6,5 per cent.
  • The 2011 budget is set in the context of a far reaching effort to remove structural impediments to growth which includes the opening of closed professions, restructiring public enterprises, combating tax evasion, overhauling the pension system, reforming the labour market, opening up product markets.