Greece draft budget submitted to the Commission without pension cuts

TheEuropeanCentralBank / tribune.com.pk

Greece on Monday submitted its draft budget for 2019 to the EU Commission  for approval. Reports have the budget set a primary surplus of 3.6 %t of GDP giving room for € 1.1 billion to implement various ‘relief measures’ as  previously announced by the Tsipras government to alleviate the effects of austerity on the most vulnerable groups.

These include higher spending on social welfare, with measures such as rent subsidies for lower-income families, more special education teachers and home carers but more significantly, the suspension of the implementation of yet another round of pension cuts as demanded by the lenders and approved by parliament last year.

National budgets from all the eurozone countries have to be submitted to the EU for approval, to verify whether they are in line with EU rules. The Commission can ask for changes if they are not.

The European Parliament, tightened previous legislation in 2013, giving the Commission enhanced powers to strengthen budget discipline, in order to reduce national debt to below 60% GDP and contain member states’ annual deficits to under 3% of national GDP

The new regulations give the Commission an extra level of oversight on member countries’ budgets and the power to impose financial and legal sanctions for those breaking deficit and debt limits.

“These new laws are a key element in building stronger economic governance for the euro area and boosting the EU’s armour against further economic crises,” former European Parliament President Martin Schulz said at the time.

The enhanced powers have not yet been exercised, and so far member states who broke the rules were either were urged to follow the rules the following year or given special dispensation to exceed the deficit limits, something that the Commission is does not appear to be prepared to do for Italy whose government is not favoured by the EU institutions.