ATHENS (Reuters) - Greece on Monday unveiled next year’s budget draft, aiming to attain a bigger primary surplus than that agreed with its international creditors, projecting that economic growth will pick up to 2.5 percent.
In what will be the first budget with the country out of bailout programs, the government aims to outperform on primary surplus targets for a fifth straight year to be in a position to avoid implementing painful pension cuts agreed with creditors.
Athens emerged from an international bailout in August. Prime Minister Alexis Tsipras has pitched rescinding unpopular pension cuts slated for January as part of relief measures, claiming there is ample fiscal space to do so.
The government, which has promised its euro zone lenders and the International Monetary Fund it will achieve a 3.5 percent of GDP primary budget surplus excluding debt servicing outlays, is targeting a surplus of 4.14 percent next year. If it does not apply the cuts it puts the figure at 3.56 percent.
Trailing the conservative opposition in polls, Tsipras is counting on a less austere budget to gain voters next year, when his term expires.
The draft budget projects economic growth will pick up to 2.5 percent from an expected 2.1 percent this year.
“The tax burden relief and the lowering of social security contributions would not be possible without the fiscal performance of the last three years, the fruit of the sacrifices of Greek citizens,” the draft said.
Government spokesman Dimitris Tzanakopoulos told reporters earlier on Monday that talks with the EU Commission on freezing pension cuts were progressing “on good terms”.
Solving this issue amicably is crucial as the country is closely monitored by markets and any sign of fiscal slippage may plunge it back into crisis.
“Some common ground will be found with the Commission, since it is self-evident that the 3.5 percent primary surplus can be achieved without implementing the fiscal measure of pension cuts,” the spokesman said.
The budget plan projects public debt will fall to 170.2 percent of GDP next year from 183 percent in 2018.
Tsipras has promised to hand out a social dividend to those hit hardest during the debt crisis which broke out in 2010. The exact amount to be spent will be decided after deliberations with the EU Commission.
Last month, Tsipras used a keynote policy speech to announce measures that would help fix the ills of years of belt-tightening. According to the draft budget these measures total 1.1 billion euros.
Greece will submit its final 2019 budget in mid-November.
Additional reporting by Angeliki Koutantou and Karolina Tagaris; Writing by George Georgiopoulos and Renee Maltezou; Editing by Peter Graff