Greece’s Parliament passed their 2014 budget early on Sunday which predicts a return to growth – albeit a timid one.
It took several days of debate to pass the budget, which details EUR 3.1 billion in state spending cuts and EUR 2.5. billion in additional tax revenue.
This is in spite of a reluctance from many of the government lawmakers to impose additional cutbacks as the country still reels from economic hardship.
After six years of recession, the move marks “the first decisive step in exiting the bailout,” noted Greece’s Prime Minister Antonis Samaras.
Addressing Parliament, Samaras asserted that Greece was turning a corner. “For the first time in years [Greece] will not need to borrow to cover our needs,” he insisted.
The budget states the economy will grow by 0.6% in 2014; following a 4% contraction over 2013. Furthermore, it has stated employment will decrease to 24.5% – down 1% from this year.
This is unlikely to be the final version of the document, which now awaits approval and revisions from both the European Commission and the International Monetary Fund – both bailout lenders – amongst others.
They have publicly voiced their doubt surrounding aspects of the Greek government’s figures, and argue further cuts are needed.
The Organisation for Economic Cooperation and Development has stated its belief the economy will contract again in 2014, at a rate of 0.4%, and that the budget has been branded as overoptimistic by the organisation’s economists.
The OECD also stated the country’s debt would not fall lower than 160% of the total Greek GDP prior to 2020.
Recession and hardship
Since 2007, the Greek economy has shrunk by a third.
Residents have seen their standard of living slashed as three years of tax increases, cuts to pensions and reduce salaries – economic reforms imposed to satisfy the demands of the troika of bailout creditors who gave billions of euros in rescue loans – have taken their toll.
Those reforms, which have particularly affected the public sector, have been implemented slowly and often met with violent street protests.
This has led to exasperation from many of the creditors – with head of the Eurogroup Jeroen Dijsselbloem, stating finance ministers were “starting to lose patience”.
In addition, whilst the talks with the European Commission and IMF regarding the next round of funding where originally scheduled for next week; they have been delayed until January 2014.