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This article was published on February 17, 2015 at 06:36.
The last change is the February 17, 2015 at 07:41.
Zsolt Darvas, an economist at the “think tank” Bruegel Brussels and expert in Greece, estimated if the government were to Tsipras achieve reduction in the primary surplus from 3% in 2015 and 4.5% of GDP in 2016, 1.5% would need more loans from international creditors for about 45 billion euro in next five years.
Not only. A dust has settled we must find other 12.6 billion euro of “financing gap”, which added to the previous 45 make 57 billion euro of shortfall.
The budget deficit of 12.6 billion is in black and white in the fifth revision of the assistance program in Athens. A report which is expected gross financial needs of 35 billion euro compared to revenue of 22.4 billion, with a deficit of just 12.6 billion. A deficit that was hoped to fill with the issue of extraordinary bond that now, with the rates on two-year bonds shot up to 16.64%, equivalent to a forced exile from the markets. To this must be added at least another 3 billion to pay for campaign promises of Tsipras increases in pensions and new hires, and so we get to share € 60 billion of extra spending.
Even profits on Greek bonds purchased by the ECB in 2010 with the program Security Market Program (SMP), amounting to 1.9 billion euro, will eventually be returned to Athens, if the country will fulfill the promised reforms event not yet materialized.
But now we are faced with a government that denounces the 30% of reforms to do so openly challenge the claims of creditors. Doing so prevents the ECB to pay the profits on Greek bonds, until there will be a political agreement between the Troika and Athens.
The IMF is very skeptical about the chances of success of the recipe given by the government Tsipras, in a recovery that is driven by consumption, built around a minimum wage increase to 756 euro, the reinstatement of many of the employees Public fired, the restoration of collective bargaining, the reduction of property taxes and personal income and increased funding for welfare.
A “Book of Dreams” for the IMF technicians who have spent the last five years in Athens to insist on measures to promote investment growth, demanding reforms of the labor market, the tax system and the launch privatization. Now you may go back to square one.
Also in the privatization of the Finance Minister, Yanis Varoufakis, froze the programs put on the market of major public companies in the country including the company’s electricity and the most important refinery Greek, Hellenic Petroleum.
At the end of March, probably, the government Tsipras, will not have cash to pay salaries and pensions, as the tranche of the old plan, amounting to 7.2 billion euro is stalled waiting for a agreement with creditors as well as the share in 2015 is frozen IMF amounted to 10.7 billion euro.
Tax revenues fell to 3.49 billion against a target of 4.54 billion, for the mere fact that the prime minister has announced that it will put an end to the tax on real estate, Enfia.
Not only. The GDP in the last quarter of 2004 was reduced by 0.2% against an expected growth of 0.4%, a slowdown that has probably widened the deficit. Deficit will increase due to the numerous spending increases promised by the new government.
European sources say that the Eurogroup would consent to the use of about 11 billion euro, now reserved to a reserve fund for banks, in a new spending program, but hardly this transfer will be sufficient to close the funding gap this year.
They could also be reduced interest rates on old loans, for a savings of a few billion euro. But this will not be enough to cover the extra expenses, promises and announced, the government greek.
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