απλότητα
The government will sell stakes in the country’s phone, power, gas and gambling companies and airport to raise funds to trim debt expected to peak at 159 percent of gross domestic product in 2012, according to today’s statement. The sales aim to slash debt by 20 percentage points of GDP by 2015.
Greece will sell a stake in Hellenic Telecommunications Organization SA (OTE), reduce its holding in Public Power Corp SA (DEH) to 34% from 51% and will begin selling down its stake in Athens International Airport. The sales will help raise €15 billion by 2013 and €50 billion by 2015.
As part of the austerity package, Greece will cut defense spending by €1.2 billion, or 0.5% of GDP, reduce public-sector wage costs by €2 billion, or 0.9% of GDP, and trim spending on pensions by €2.5 billion, or 1.1% of GDP, according to the statement. A crackdown on tax evasion will yield €3.5 billion, or 1.5% of GDP.
The measures are aimed at meeting a target, agreed with the EU and the IMF as a condition for the bailout, to cut the deficit to less than 3% of GDP by 2014 and a self-imposed goal of reducing it to below 1% by 2015. The government still aims for a deficit of 7.4% this year, even after first-quarter revenue missed the target by €1.4 billion.
Déine
Under Mr Lenihan’s plans, €4bn of the austerity plan will come from spending cuts – including an €873m reduction in welfare support, €1.4bn will come from tax rises and the balance from asset sales. Mr Lenihan claimed that the budget was “progressive”, hitting those who could afford it hardest.
The measures will reduce the budget deficit to 9.4pc of GDP, Mr Lenihan said, from the 12.2pc without any fiscal consolidation.
By comparison the U. S. 2011 deficit as a proportion of GDP is expected to exceed 10%, the largest on record in nominal terms and the largest as related to GDP since the end of World War II.
Any idea why that last chart, on US deficit, shows a sort reversal 2010-2011? Are there new 2010 tax credits or reductions? Maybe the payroll thing?
It’s a funny jag, because without that hiccup we’d be on the fast part of the curve, returning to more normal US ratios.
[short] reversal
I can only speculate. My guess would be a brief, non-sustainable up-tick in GDP.
I know this is serious business, but this made me smile:
“As part of the austerity package, Greece will cut defense spending by €1.2 billion, or 0.5% of GDP”
Well, the 2011 and onward GDPs aren’t known. They’d all be projections right now. Funny to project a 1-year reversal, and then that rapid contraction in deficit.
Sam, it is a great opportunity for the Persians.
“By comparison the U. S. 2011 deficit as a proportion of GDP is expected to exceed 10%, the largest on record in nominal terms and the largest as related to GDP since the end of World War II.”
And projected to rapidly drop. It is long term deficits, largely due to entitlements that are our problem.
Steve
Of course, if we flip around my question and Dave’s answer … if the rapid drop is based on optimistic GDP projections for years-out …