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Victoria Mindova

The Greek Ministry of Finance has presented optimistic forecasts in the present difficult times with the draft budget for 2012. The deficit is expected to drop to 5.4% of GDP or € 11.43 billion, the recession will reach only 2.8%. Moreover, the government is planning for the first time that Greece will have a primary budget surplus of € 2.18 billion or about 1.1% of GDP. It sounds very promising, but the last two years have shown that the Greek government plans should always be taken with deep reserves, even when the country's Prime Minister is the eminent financier and former Vice President of the European Central Bank, Lucas Papademos.

"No new measures will be necessary if we achieve what has been voted in 2011," said the Minister of Finance Evangelos Venizelos, which is the key to the Greek economic drama. The only measure to which the Greek rulers have remained faithful until now is the increase in taxes, with 26 new changes in the last year alone. Other measures that have been introduced incredibly quickly include the reduction of pensions. This combination has failed to bring the desired effect because the great problems in the Greek economy remained untouched.

Next year, foreign debt will be € 309 billion or 145.5% of GDP compared with € 352 billion or 161% of GDP in 2011. This is mainly due to the exchange programme for Greek government bonds (Public Sector Involvement PSI +), which also depends on the level of deficit. Without it, the budget deficit in 2012 could not reach levels below 6.4% of GDP or it would be about € 5 billion higher.

Budget revenues will increase by € 4.56 billion and it is planned for the state to collect in 2012 a total of € 59.184 billion. These high numbers surprise the analysts given that the government will not be able to reach the target of € 54.67 billion this year. At present, the gap in the treasury is nearly € 3 billion, which will make the supervisors once again update the expected fulfilment of the recovery programme.

Budget spending, on the other hand, does not seem significantly lower than in 2011, when it was set at € 72.5 billion. In 2012, it will reach 77.6 billion. Interest payments on foreign debt will record a decrease, reaching € 13.9 million compared with € 15.7 million in 2011.

Wage and pensions costs will amount to € 19.4 million, which is a decrease of € 672 million or 3.3% compared with their levels in 2011. Wage cost reduction comes from the termination of a large number of temporary contracts in the public sector and the introduction of the payroll table with the new wages. Appointments are limited and more weight will be given to revising the positions in the administration and the introduction of flexible forms of employment.

"The budget for 2012 will bear a heavy burden and is accompanied by bad omens," Evangelos Venizelos told reporters after presenting Greece's economic programme for next year. Apparently, he himself is fully aware that there is no way to raise the revenue in the treasury, when company turnover is falling, personal income is decreasing, unemployment is approaching 20% ​​and Greece will remain in recession for the fourth year.

When presenting the budget, Venizelos refused to enter into details of what the exact measures would be for reducing the deficit by about € 10 billion by the end of 2012. The only thing he specified was that the priority of this government would be to create a medium term economic framework for 2012-2015, improve the tax system, introduce the "necessary structural and administrative reforms" and activate the privatization processes. This is a pretty serious commitment in itself and the coming months will show whether the Socialist Minister of Finance will be able to bear the brunt of this programme. For the time being, Venizelos is planning that the draft budget for 2012 be adopted by December 7, so that Greece could attend the next summit, having a complete financial programme for next year.