11.6-billion-euro cut starting this year…

In the meeting that will be held this morning, the political leaders will discuss the removal of funds from hundreds of codes from the current budget and not from 2013.

 

Based on the final proposals of the Finance ministry, it is difficult to achieve the target of 11.6 billion euros for 2013-2015 without major horizontal cuts across all sectors, even in wages and pensions. Since the latest data shows that all locked measures amount to no more than almost 10 billion euros, the economic team thinks the implementation of measures should start from late 2012 to cover the discrepancies of this year's budget too.

 

In this case, it will be the political leaders again who will be forced to impose additional costs that the relevant ministers did not propose voluntarily. The heavy burden falls on the Labour ministry, with cuts reaching 4 billion euros:

 

-   2 billion from cuts in social and welfare benefits

-    2 billion from cuts on double pensions, cap on pensions, 10-20% reduction in the lump sum

 

The Administrative Reform ministry should save over 2 billion that will come from:

 

-  administrative structure reduction by 30% (elimination of administrations, sectors)

-  wage cuts in SOEs by extending the Single Payroll

-  closure-merger of organizations (more than 250 in the first phase)

-  implementation of the “1 hiring in 10 layoffs” rule

-  forced transfers

 

However, ministers say they have nothing to cut, since the budgets of the ministries are already at their limits.

 

According to the governmental calculations, it is necessary to cut 2.15 billion euros from Health and Education, at a time when the Health minister admitted that pharmaceutical expenditure is out of control and must be contained with new measures. 2.15 billion euros are expected from these two sectors:

 

-          2 billion from cuts in pharmaceutical spending, merging of services, reduction of operating costs, mergers of hospitals

-          100-150-million-euro cuts per year in operating expenses, grants and mergers of Universities and Technological Institutions

 

Cuts should be made to the on-call services of the doctors as well, although hospital doctors who met with Lykourentzos openly expressed their disagreement. The ministries of Defense and Interior submitted their proposals for cuts, whereby both should relieve the State of 1.4-billion-euro costs.

 

The ministry of Defense found 800 million euros:

 

- 680 million from cuts in armament programs

- 120 from equivalent measures to avoid cuts in officers' payrolls

 

The Interior ministry must cut about 600 million euros:

 

- reduction in grants

- closure of organizations and OTA

- increase in the fee for immigrants

 

The ministry of Tourism will also contribute to reducing costs. As Olga Kefaloyiannis said, they will promote the restructuring of the ministry and its supervised institutions.

 

An additional 2 billion euros is sought through several cuts, with a horizontal reduction of operating costs in all ministries.

 

If the 11.6 billion euros is not found, there is a risk of measures being imposed without the Greek stamp, at the suggestion of the Troika. Although the ministries are trying, as government officials say, not to affect further the low wage earners and pensioners, they do not exclude the possibility of new horizontal cuts in wages and pensions.