Smaller budget for everything except interest expenditure

The supplementary budget for 2012, prepared for to be voted on Tuesday as it is expected to be submitted to parliament by the Finance ministry today , includes cuts of 3.2 billion in salaries of civil servants, pensions, large bonuses and operating costs of public services, as decided jointly with the Troika.

The aim of the cuts is to offset the additional tax revenue losses that will be caused by the recession and the unprecedented reductions in the salaries of the private sector.

The big losers in terms of cuts will be:

    * the pension funds, which will lose an additional 962 million euros. Respectively, there will be cuts in drug spending, main and supplementary pensions. The Labour ministry estimates that the increase in unemployment and wage cuts will deprive insurance organizations of around 4.5 billion euros
    * the PIP and public investments, since expenditure will be reduced by 400 million euros compared to the original budget of December 2011. However, compared with last year, the new budget provides an increase in public investment by 10.5% or by 700 million in order to reach 9.3 billion euros
    * the armament programs of the Defence ministry with 300-million-euro cuts compared with the original budget

In general, the supplementary budget provides for an additional 1.4-billion cuts in primary expenditure in relation to the budget passed in December:

- 205 million in special payrolls

- 66 million in public pensions

- 537 million in grants to insurance bodies for payment of pensions and health benefits

- 43 million in large family bonuses

- 50 million from the on-call duties by NHS doctors

- 300 million in the operating expenses of all ministries

- 80 million in spending by the Education ministry for the operational needs of research institutions, deputy fees and educational grants

- 25 million in grants from the Ministry of Culture and Tourism

- 86 million in Ministry of Rural Development expenditure for grants and equalization payments

A budget increase is provided only for expenses on debt interest, which are expected to exceed 300 million euros this year. Compared to 2011, the supplementary budget provides for a 3.3-billion-euro reduction in interest expenditure.