Cutting wages but also looking for 13.7 bn worth of new measures!

Sacrifices of over 16 bn, with new increases in taxes and cuts in wages, are being ushered in by the updated Medium Term plan for four years, from 2012 to 2015.

The new Medium Term released by the Treasury holds additional measures of up to 13.74 bn for 2013-2015, which so far remain unclear.

The aim is to collect around 53-56bn a year from taxes. Direct taxes on income are projected to increase by 3.6 bn euros in 2012.

Smaller incomes (mainly due to recession and less from tax cuts), are expected in 2013-2014, when direct taxes are reduced to around 22.5bn euros, while they will explode to up to 24bn euros in 2015.

An “axe” will drop on government spending, the operating costs of which are limited to 13.7bn in 2015, against 17.5bn in 2011. Utilities will continue to produce high deficits of about 572 million in 2012, 453 million in 2013, 396 million in 2014 and 388 million in 2015. Payments to employees will drop from 490 million this year to 460 in 2012, 380 in 2013, 275 in 2014 and 330 to 2015.

Social Budgets reveal that subsidies to pension funds will be decreased by 3.7bn euros. The allocation of social security will lead to 13.7 bn in 2015, compared to 17.5 bn this year.

The new Medium Term incorporates the relief of bond “haircuts” at 50%; the cost of interest rates is projected to fall to 13.2 bn in 2015 against 16.38bn this year.

At the same time, the application of the Bond Exchange Program (PSI +) reduces the bond portfolio by 50% of the 206 billion held by banks and pension funds.