The government of recently re-elected Greek Prime Minister Alexis Tsipras will present to parliament the draft 2016 budget and the policy programme on Monday. The draft budget has been described as “painful” as Greece has to carry out deep economic reforms and spending cuts in exchange for the EUR 86 B bailout deal agreed with the international creditors. The budget forecasts that the Greek economy will stay in recession next year before it returns to growth in 2017 in line with the estimates of the creditors. Government officials expressed optimism that the recession in 2015 will be milder than foreseen in the bailout programme due to an increase in the revenues from tourism and stronger than expected first-half data. Greek economy is officially expected to shrink by 2.3 % in 2015 and 0.5 % in 2016. Public debt is expected to increase to 196 % of GDP this year and reach a peak of 201 % in 2016, including the new loans. An official of the Greek finance ministry assured that the “main targets of the draft budget will not differ from the estimates in the bailout”, daily Kathimerini informs. The primary budget deficit before debt service this year is expected to be 0.25 %, while a surplus of 0.5 % is foreseen for next year. Greece is projected to achieve a primary surplus of 3.5 % of GDP a year from 2018. Tsipras told MPs that Greece wants to conclude the first bailout review and recapitalise its banks as soon as possible in order to launch talks with eurozone leaders on debt relief. Greek Finance Minister Euclid Tsakalotos is scheduled to meet the Eurogroup in Luxembourg on Monday. The finance ministers of the eurozone are to expected to discuss the set of reforms which Greece has to implement by mid-November in order to be granted the next tranche of the bailout. This coincides with the presentation of the four-year policy programme of the government before a vote of confidence scheduled to take place on Wednesday. Tsipras is expected to focus on the so-called “grey areas” where the government will try to soften the impact of the measures and negotiate better terms or find alternative measures with the same fiscal impact. Among these areas are debt rescheduling, labor law, pension reforms, liberalisation of the energy market and a controversial 23 % tax on private education.
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