Parliament’s economists: Budget is ‘strongly recessionary’

The Greek Parliament’s Budget Office on Wednesday strongly criticized the government’s forecasts for the economy and its planned policies as reflected in the draft budget.

The economists argued that although the budget provides for 2.7 percent economic growth, it has “a strongly recessionary character in the short term,” and noted that it promotes “tax-centered austerity,” highlighting that the new tax measures cannot support growth.

The Budget Office report described the Finance Ministry’s estimates for increases in private consumption, investments and exports as “quite optimistic.” It went on to note that the economic policy mix will lead to revenues failing to meet the targets set, hampering the effort to return to growth.

According to the economists, the draft budget even contradicts itself in stating that the return to growth will mostly rely on “the consistent application of the Greek economy’s support program, combined with the gradual relaxation of capital controls and progress in the domains of tackling nonperforming loans and structural changes.” The report claims that this very argument falls apart with the forecast for far lower revenues from privatizations and the delays in handling bad loans and promoting “structural changes.”