The newest central administration in Greece has submitted the plan for the 2012 budget, which is expected to halve the present levels of budget deficit.
Highlights Greece Budget 2012:
Evangelos Venizelos, the Finance Minister, has stated that in 2012 fiscal deficit will amount to 5.4% of the GDP, as opposed to 9% of the GDP in 2011 fiscal.
This reduction will be possible due to a cancellation of Greece s debts presently owned by the commercial banks.
As per budgetary predictions Greece will see a basic surplus in 2012 fiscal. This will be equivalent of 1.1% of the GDP.
As per the series of deductions introduced during October 2011, taxes have been raised and pensions, and wages and jobs have been deducted. These steps have taken a major toll on Greece s economy, which is expected to reduce by 5.5% in 2011 fiscal and by 2.8% in 2012.
According to estimates, the Greece budget 2012 will be able to reduce recession by 2.8%.
The tax revenues are expected to go up by 12 billion euros but unemployment is set to rise by 17% as well.
The budget is also looking to put into effect the October 26th Agreement and reduce public debt.
Measures related to taxation will remain the same as in 2011 fiscal.
In 2012 investment will decrease by 7.5%. In case of private consumption a decline of 4.1% is expected.
Exports are supposed to go up by 6.4% and imports will be reduced by 2.8%. The rate of inflation is expected to slow down at 0.6%.
In 2012 fiscal, tax revenues are expected to increase by almost 360 billion euros to 53,301 billion euros. The estimated tax receipts for 2011 fiscal are 49,702 billion Euros.
Primary public expenditure in 2012 is expected to reach 49,702 billion euros from 51,380 billion euros in 2011 fiscal. This will mark a decrease of 2,745 billion.
It is expected that with PSI (private sector involvement) the budget deficit in 2012 will be 5.4% and without PSI it will add up to 6.7%.
Several tax free deductions will be done away with.
Taxes applicable for heating oil will be equivalent to fuel oil taxes in 2012.
Property owners will be required to pay additional taxes such as emergency property taxes.
The overall increase has been estimated at 2.65 billion euros and the payments will be made through electricity bills. Tax payers will be required to pay a couple of installments for 2010 fiscal and full taxes of 2011 and 2012.
Greece Budget 2012 Analysis:
The targeted deficit deduction in Greece 2012 is the newest bailout package of Eurozone. Venizelos has further stated that various banks both Greek and overseas will have their options on deciding the ways in which they can contribute to the whole deal.
Analysts feel that if Greece s economy performs below expectations in 2012, as it has done in 2011 fiscal, then the government might be unable to achieve the targeted deficit deductions.
According to economists, Greece budget 2012 is based on actual numbers and not supposed statistics. It has been predicted that there will be fiscal betterment in 2012 but experts opine that the economy will be functioning under high levels of pressure. It is expected that the government will adhere to the pattern of restrained expenses like it has done in the last couple of years to deal with the whole situation.
Evangelos Venizelos, the finance minister of Greece, has stated that the economic targets for 2012 fiscal are achievable because these have been determined by leading International Monetary Fund and European Union experts. This, he said, lent a lot of credibility to the whole budget. He also feels that if the 2012 budget is implemented properly then no further austerity measures will be necessary to achieve the primary surplus target of 1.1% of the GDP.
In 2012 fiscal tax payers will be required to pay an additional 25 billion euros. The main reasons behind this may be enumerated as below:
Deduction in tax free expenditure
Decrease in level of tax free benefits provided on annual income. The new mark is 5000 euros.
Removal of tax benefits for collecting receipts
Greece Budget 2012 – Latest News:
The 2012 Greece budget has increased the austerity levels further. The tax rates have been increased and expenses are going to be lesser than the 2011 fiscal. All these steps have been taken following suggestions made by the interim coalition government.
Lucas Papademos, the Prime Minister of Greece, has stated that this budget will help the country recover its financial credibility. He has stated that the budget will assist Greece in meetings its various obligations and will also help it to overcome the present financial crisis.
It is expected that the 2012 budget will bring down the budget deficit from 9% of the GDP to 5.4%. This will be done with a debt swap, which is an integral part of the bailout deal.
It is also supposed to produce a budgetary surplus in 2012 this will only be the second time that this happens since it became a part of the Euro block in 2001. The government, though, will need to work really hard to achieve its targets in the upcoming fiscal. It will have to reduce the public sector as well as extensive tax evasion in Greece.
Greece is facing recession for the 4th straight year. With the newest installment of the fiscal aid to be released by the European Union and the IMF, it might be able to stay away from bankruptcy.
The budget, though has met with protests. When the Greece budget 2012 was being voted, the whole process was disrupted by masked agitators who threw petrol bombs at the police officials who were stationed outside the Parliament. A recent survey has revealed that majority of the people expect economic conditions to become worse in the coming months which is expected to lead to more protests.
Greece Budget 2011:
In 2011, fiscal budgetary deficit is set to get up to 9% of the GDP from a previous forecast of 8.5%. This has happened as a result of continued depreciation in tax revenues. The finance minister, though, is sure that the newly introduced property tax will compensate the losses during the fourth quarter of the present fiscal.