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Samaras announces €500m pre-election giveway

One million set to benefit as are police and soldiers earning less than €1,500 a month

After conclusion of seven-month negotiations with the troika, Prime Minister Antonis Samaras says €500m will be distributed among roughly one million needy citizens

Antonis Samaras (Photo: Reuters) Antonis Samaras (Photo: Reuters) More than €500m of the €3bn primary surplus that the government expects for 2013 will be distributed as a social dividend in May, just before the European and local elections, the prime minister said on Tuesday.

Speaking after the conclusion of talks at the finance ministry between the government and the troika, Antonis Samaras also claimed that there would be no further austerity measures.

The prime minister said that the €500m will be distributed among roughly one million Greeks based on their income and assets.

Soldiers, police and other so-called uniformed personnel earning less than €1,500 a month – which is almost three times the minimum wage – also stand to benefit from the government pre-election giveaway.

The deal struck with the troika also called for significant structural reforms, mainly by adopting recent proposals from the Organisation for Economic Cooperation and Development (OECD).

Samaras said that this would boost growth by liberalising the economy, increasing competitiveness and leading to a reduction in prices.

He went on to announce a one-off €20m sum to be spent on providing shelter and food for the homeless, while the rest of the primary surplus will go toward paying off outstanding state debts to the private sector, covering the cost of a reduction in social insurance contributions and paying the country’s national debt.

The prime minister confirmed a 3.9% reduction in social insurance contributions from July 1, with a 2.9% reduction in the contributions paid by employers and a 1% reduction in the contributions paid by employees. According to a senior finance ministry official, the government has set aside €350m to cover the losses in revenue for social insurance funds that will result.

The source clarified that the €500 million euros for lower-income groups will be a one-off payment and its distribution will be based on criteria similar to those used to hand out welfare benefits. He also explained that the government would spent a third of the primary surplus, or an additional €1bn to that envisaged in the budget, overdue public-sector debts to private-sector firms and individuals in 2014 - bringing the total for the year to €2.8bn - in order to increase liquidity in the economy.

A resident from a hospice for people with chronic or incurable diseases takes part in a rally on March 18 to protest against the hospice's possible shutdown due to government cutbacks. Supported by family members, they blocked access to the prime minister’s office (Photo: Reuters) A resident from a hospice for people with chronic or incurable diseases takes part in a rally on March 18 to protest against the hospice's possible shutdown due to government cutbacks. Supported by family members, they blocked access to the prime minister’s office (Photo: Reuters) Another third of the surplus, or €1bn, will be spent to pay down debt.

Questioned about recent court decisions finding in favour of judges and uniformed personnel in relation to salary demands, the same source said that no specific sum has been provided for. He noted that for judges, in particular, the cost of the court decisions came to €60m, while for uniformed personnel, the cost was roughly €500m to cover back pay and just under €500m annually. He noted that the cost for the uniformed staff will be covered by equivalent measures.

On tax issues, the source said that the Greek side and the troika had agreed to reduce tax fines to €250 euros from €1,000 euros for simple account books and to €500 euros from €2,500 euros for double-entry books. It was also agreed, based on a proposal from the government, that a capital gains tax on sales of property should be waived for those who have owned a property for 20-25 years.

The disbursement of bailout loan tranches to Greece is now expected to be approved by EU finance ministers via a teleconference, and the sums will be disbursed when laws implementing the agreement struck with the lenders are passed by the parliament.

Finance Minister Yannis Stournaras, in the presence of Alternate Finance Minister Christos Staikouras and Deputy Finance Minister George Mavraganis, said that Greece's EU partners are expected to announce that an agreement on a technical level with Greece has also been reached. Earlier, Stournaras had taken part in a teleconference with his EU counterparts on the EU banking union, ahead of Wednesday's EcoFin meeting to discuss the issue in Brussels.

He noted that the economy had greatly improved during the last seven months of ongoing negotiations with the troika.

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George Mavraganis
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Antonis Samaras
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