A senior official from the Greek Ministry of Finance admits that the Troika has officially "put on hold" the allocation of the primary 2013 budget surplus. He also reveals that no agreement on the fiscal deficit for 2014 has been reached with the lenders and that part of the surplus will be used to repay the outstanding obligations of the state to individuals, which means that social spending will shrink even more. According to the officer, the Troika insists on reducing the allowances for civil servants.
The Troika is reserved and concerned about the allocation of the surplus due to the gap in the revenue to the state budget, which is recorded for the second consecutive month and is filled with cuts in spending.
What surplus is under consideration?
According to a senior official from the Ministry of Finance, the representatives of the lenders have made it clear that the primary surplus that the government will allocate should not affect the fiscal targets for 2014. I.e. if the Troika allows the allocation in 2014 of 1 billion euro from the "surplus" in 2013, equivalent measures will have to be provided with respect to either costs or revenues, in order to cover this amount and avoid burdening the 2014 budget.
As explained by the expert, every payment of an allowance in 2014 will be recorded as an expense in the budget for 2014. To the remark that "there is a surplus", he replies that "the surplus is not in the treasury" and that every expense must be reported in any case.
The inspectors are not convinced that the value of the social payments planned by the government in favour of the uniformed staff and retirees (not in favour of long-term unemployed and poor families) will be covered and refuse to give their consent before obtaining guarantees thereof.
The same source reveals that part of the surplus for 2013 (without specifying the exact amount) will be used for "development activities". It seems that the government has adopted the requirement of the lenders to use part of the surplus to repay the overdue obligations of the state, for example, to pharmaceutical companies and pharmacists. The Troika is exerting pressure in that direction because otherwise these obligations will have to be covered with a new loan.
A senior official notes that "we have not yet resolved the issue of the primary surplus for 2013", explaining, "We are certainly not at the starting point but we have not yet agreed on the parameters for 2014."
The overdue obligations of the state amount to 4.36 billion euro
In January, the overdue obligations of the state to individuals amounted to 4.36 billion euro or 4.8 billion euro, including the outstanding tax refunds. Overdue are considered existing obligations to third parties that are not repaid 90 days after the due date.
The outstanding tax refunds in December 2013 recorded a small decline as they amounted to 453 million euro compared to 519 million euro in December 2012.
In particular, 2.81 billion euro of the 4.36 billion euro in outstanding obligations of the state are obligations of social security funds. Of them, 1.76 billion euro are obligations of the National Organization for Health Care Provision, 790 million euro of hospitals, 326 million euro of local authorities, 234 million euro of the ministries and the remaining 204 million euro are obligations of other entities.
It should be noted that one of the objectives of the economic policy programme was the reduction of the total amount of overdue obligations with a positive effect on the liquidity of the economy.
The required funding to clear the overdue obligations under very specific conditions has been agreed with the partners in the third update of the memorandum of economic and financial policies in order to avoid the formation of new obligations.
New cuts in salaries
A senior official from the Ministry of Finance also reveals that the Troika is raising the issue of a further reduction in salaries in the public sector by cutting allowances.
More specifically, as he points out, the issue raised does not concern the basic pay but the travel allowance paid to civil servants, as significant variations, even at the Ministry of Finance itself, have been detected.
The same leading officer gives the example of travel allowances received by different categories of employees (engineers receive 56 euro, inspectors from the Chief Accounting Department 59 euro, from the Greek Agricultural Insurance Organization (ELGA) 40 euro, the Payment and Control Unit of EU Guidance and Guarantee Funds 94 euro, etc.).
Regarding these data, he comments that "the extra money is properly taken but there should be rationalization." However, according to the same source, with the support of the Ministry of Administrative Reform, "the income of the employees has to be bound to their attestation."
The gap in the revenue is a serious concern
There was a gap in the revenue in February too, which is the Troika’s major source of concern and therefore, the issue of the 2014 budget remains open.
The representatives of the lenders have made it clear that the main purpose of the 2014 budget is to achieve, at any cost, a primary surplus of 2.75 billion euro or 1.5% of GDP.
The full amount of the surplus will be used to reduce the public debt, and in the case of overachievement, the government will be able to allocate 70% of it. This ambitious goal is however threatened due to the fact that the revenue has been lagging behind for the second consecutive month.
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