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Greeks face more cuts in 2014

November 21, 2013

The Greek government has submitted its 2014 budget to parliament, seeking lawmakers’ approval for more spending cuts. But Greece's creditors say the proposals are insufficient and have refused plan.

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Image: AFP/Getty Images

The government of Greek Prime Minister Antonis Samaras submitted its draft budget for 2014 to parliament in Athens on Thursday, envisaging additional saving to the tune of more than 1 billion euros ($1.34 billion).

On hopes of emerging from six years of recession next year, Deputy Finance Minister Christos Staikouras said the government expected a slight primary surplus in the budget. The primary surplus doesn't take into account interest payments on the country's debt, and according to Staikournas might rise from 812 million this year to 3 billion euros in 2014.

“For the first time, the major sacrifices made by the Greek people are paying off, with the first signs of recovery this year,” he said, adding that Greece might return to financial markets next year for funding.

However, the crisis-hit eurozone country still sits on a huge pile of debt and has been granted 240 billion euros under a bailout program due to expire in 2014. As a result of interest payments on this debt, the government said it expected a gap in funding to the tune of between 500 million euros and 800 million euros next year.

Under the 2014 budget plan, Athens plans to plug the gap with structural reforms to the social security system, better tax collection and public sector cuts.

But Greece's international lenders, which include the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), are skeptical. Following inconclusive bailout negotiations, the group - known as the troika - said Thursday that Greece's projected 2014 fiscal gap might rather come in at 1.5 billion euros.

Nevertheless good progress had been made in the talks, troika officials also said, adding that a few outstanding issues may likely be resolved in time for eurozone finance ministers meeting scheduled for December 9.

An agreement with creditors on Greece's budget shortfall is needed before the ministers can approve the disbursement of another bailout tranche of 1 billion euros to Greece.

Prime Minister Samaras is expected in Berlin on Friday for talks with Chancellor Angela Merkel, who on Thursday said she harbored "very great respect" for the "absolutely noteworthy" progress made by Athens to date.

uhe/msh (dpa, AP, Reuters)