Greece’s government presented an optimistic budget for 2016 on Friday and said that year-end numbers for 2015 would indicate that the economy had held steady in the current year -- rather than shrinking by 2.3 percent as previously feared.
The budget outlined spending cuts of about 5.7 billion euros ($6.07 billion) in 2016, including 1.8 billion euros ($1.92 billion) from pension funds, and predicted that the Greek economy would shrink about 0.7 percent in the coming year. As recently as last month, the government had forecast an economic contraction of 1.3 percent in 2016, according to the New York Times.
“The Greek economy endured, disproving disaster scenarios,” Greek Finance Minister Euclid Tsakalotos said in a statement accompanying the budget. "We are submitting the budget amid adverse economic conditions but the prospects are very positive," he added.
The budget -- set to go for vote in the parliament on Dec. 5 -- may face criticism for its proposed cuts in social welfare and increased taxation as an austerity weary Greek public mounts pressure on Prime Minister Alexis Tsipras to show tangible results for signing the country up for a third bailout package in July.
While Athens has since implemented a number of unpopular reforms, it has had to go for ever harsher belt-tightening measures like home foreclosures to satisfy the terms of the bailout package -- a move that has not gone down well with some members of the ruling leftist-led Syriza party.
On Thursday, the prime minister’s allies in the parliament grew thinner, after he expelled two of his deputies for refusing to back an austerity bill demanded by Greece’s international creditors in exchange for disbursement of the next tranche of loans.
The bill, outlining the regulation on tax arrears and home foreclosures, will allow Greece to access a part of the $12 billion bailout package, after creditors reportedly said the country had met enough of the austerity targets set in July. A final decision on clearing the loans will be taken on Monday, Reuters said, citing eurozone officials close to the matter.