By T. Tsiros
[email protected]
A pending round of social security cuts - set for Jan. 1, 2019 - will almost exclusively account for 389 million euros in reduced state spending, with the majority of affected pensioners being ones that retired from the public sector over previous years.
The latest pension slashes, agreed to by current leftist-right coalition government with institutional creditors, will be achieved through a recalculation - downwards - of social security rates for people that retired before successive pension reform legislation was enacted.
The figure from reduced state spending for the social security sector is clearly cited in a revised medium-term fiscal program (MTFP) strategy, which was tabled in Parliament on Friday evening.
Nevertheless, the government's oft-cited "countervailing measures" also appear to be curtailed. For instance the same MTFP submitted in May 2017 foresaw countervailing measures worth 2.65 billion euros. Under the revised plan submitted this month, the figure is 1.99 billion euros, a "haircut" of 660 million euros.
In a bid to "sweeten" the forthcoming austerity measures - pension cuts and possibly a lowering of the tax-free annual income threshold, in 2019 rather than 2020 - the Tsipras government's latest pledge is to offset reduced counter-measures with tax breaks worth 700 million euros.
At the same time, while the latest round of austerity measures are "set in stone", whatever countervailing and tax relief measures depend on Athens fulfilling, and even exceeding, creditor-mandated fiscal targets - such as reaching a 3.96 percent primary budget surplus (as a percentage of GDP) in 2019 instead of the agreed to 3.5 percent.
The MTFP clearly refers to the decision to further cut pension rates at the beginning of 2019, followed a year later by the planned lowering of the taxable income threshold.
