Greek government: Our proposal doesn’t doom the country to tough austerity and constitutes a viable solution for the economy

The proposal submitted by the Greek government is not part of its official programme, but a result of tough and intense negotiations to achieve a deal which will not hurt labour rights, will not destroy the social fabric and will provide prospects, government sources said on Monday evening after the end of the summit meeting of Eurozone leaders in Brussels.

It is a proposal, however, that doesn’t doom the country to tough austerity and constitutes a viable solution for the Greek economy, without burdening low and medium incomes, the same circles said.

The government, they continued, doesn’t want one more deal that will perpetuate uncertainty, but claims a long-term solution that will settle medium-term issues afflicting the Greek economy and society. At any rate, the public debt issue and Greece’s medium-term funding has to be resolved, in order to end the vicious circle of uncertainty and so that the country is not obliged to keep requesting loans to repay the old ones, the circles said.

The Greek proposal foresees low primary surpluses of 1 pct for 2015 and 2 pct for 2016, versus 3 and 4.5 pct agreed upon by the previous government. This means that for 2016 alone, the economy will be relieved of measures totaling 8.2 billion euros. In the next five years, the overall fiscal space ensured will reach 15.4 billion euros, which is equal to more than 8.5 pct of Greek GDP.

As government circles noted, the government modified the solidarity levy range to spare low incomes and low pensioners.

Furthermore, VAT retains three rates of 23 pct, 13 pct and 6 pct (from 6.5 pct). Energy, water and catering businesses will remain in the second VAT rate, while the rate on books and medicines will lower by 0.5 pct.