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Greece\u2019s newly appointed finance minister, Kyriakos Pierrakakis, headed into work on Monday having to deal with a list of tasks, foremost among which is balancing the budget between the need to satisfy wants and demands \u2013 fair or unfair \u2013 and not to jeopardize fiscal stability, which markets have already factored into the lower borrowing rates.<\/p>\n
There is no doubt, however, that the margins are relatively slim and do not allow certain demands to be met, and especially not the reinstatement of holiday bonuses for public employees (2.8 billion euros) and pensioners (\u20ac5 billion). The best possible scenario will allow for an increase in spending by \u20ac1.2-1.3 billion.<\/p>\n
Even based on more optimistic estimates, bonuses of \u20ac1.4 billion could barely be included, as this would limit the scope for tax relief or other growth interventions that the administration has promised. Pierrakakis will be called upon to decide which option best serves the government\u2019s goals.<\/p>\n
Economic analysts have little doubt about the answer.<\/p>\n
The general director of the Foundation for Economic and Industrial Research (IOBE), Nikos Vettas, argues that the use of any fiscal space \u201conly makes sense if it serves a growth goal.\u201d He specifically mentions the proposal that IOBE has repeatedly submitted for the creation of an incentive system to combat tax evasion among freelancers, with a deduction of the relevant expense from taxpayers\u2019 taxable income.<\/p>\n
Vettas also supports the need to prioritize support for kindergartens, which will help increase women\u2019s participation in the labor market that is currently very low. \u201cChoices must contribute to the transition to the country\u2019s new productive model, and not be a one-off benefit,\u201d he adds.<\/p>\n
Parliamentary Budget Office head Giannis Tsoukalas believes that bonuses are not only impossible right now, but are also the wrong priority. \u201cThe absolute priority must be to reduce debt,\u201d he says. \u201cIf space is found from additional tax revenues in 2025, it must be go to reducing taxes and social security contributions.\u201d<\/p>\n<\/p><\/div>\n