The New York Times, by NIKI KITSANTONIS
ATHENS — After four years of austerity, the Greek government on Monday heralded a series of tax cuts and benefits in a draft budget forecasting a steady return to growth as it moved to shore up its flagging popularity and avert early general elections.
The economy, which has shrunk by a quarter since 2008, is expected to grow 2.9 percent in 2015 — buoyed by an increase in consumption, tourism and exports this year — after a contraction of 3.9 percent in 2013, according to the budget. It was presented in Parliament by Finance Minister Gikas Hardouvelis.
With a projected budget deficit of 0.2 percent of gross domestic product next year, Mr. Hardouvelis’s blueprint is essentially the first balanced budget presented by Greece in several decades. Included in the package of promised relief are 30 percent reductions in both a tax on heating oil and on a so-called solidarity levy on income.
The pledges to ease up on austerity come as an increasing number of countries, including France and Italy, challenge the strict fiscal discipline championed by Germany.
Greece’s budget still requires the approval of the European Commission, the European Central Bank and the International Monetary Fund, known as the troika, whose representatives have been in Athens since last week inspecting the government’s progress in enforcing economic overhauls.
The troika of creditors has extended Greece two loan programs worth 240 billion euros, or about $300 billion, since 2010 in exchange for painful austerity measures that have slashed households’ income by a third and pushed unemployment to 27 percent.
The troika is not the only obstacle. In the midst of mounting political and social tensions, Prime Minister Antonis Samaras on Monday requested a parliamentary vote of confidence in his government.
The move is a bid to secure the backing of wavering coalition lawmakers and to quash mounting speculation about early elections as the leftist opposition party Syriza, which opposes the onerous terms of Greece’s bailouts, is leading in opinion polls. Syriza has pledged to block the government’s candidate for president in an election scheduled for February, a move that would lead to snap elections.
The vote of confidence is scheduled for Friday after three days of debate in Parliament, where the coalition has a slim majority of four seats.
Independent economic analysts said that the draft budget presented by Greece was ambitious and likely to be revised by the troika, adding that growth figures have been inflated by the French and Italian authorities, too.
However, Greek political instability could encourage foreign auditors to make some concessions, probably allowing the tax cuts to remain in place.
“It is unlikely the troika will back down on structural reforms Greece is still pursuing, but they have to give Samaras some rope,” said Mujtaba Rahman, a director at the London-based Eurasia Group, referring to a pending second overhaul of the pension system and to changes in the labor market.
With the markets paying attention to Greece again in view of the political upheaval, the government is likely to win backing for its fiscal policy, Mr. Rahman said.
“It is easier for creditors to work with a New Democracy-led government than a Syriza-led administration,” he said, referring to Mr. Samaras’s conservative party, which leads the fragile coalition. Mr. Rahman noted, however, that there was a sense that Syriza was “moving towards the center.”
In addition to the proposed tax cuts, the government promised an increase in the number of installments in which Greeks can pay off tax debts to the state. The authorities have also set aside €541 million to reverse cuts to the salaries and pensions of Greek judges and of employees of the police and armed forces.
The country’s level of debt, the highest in Europe, is expected to fall to 168 percent of G.D.P., from 175 percent this year.
Describing the apparent upturn as “the result of the unprecedented sacrifices of Greek society, households and businesses,” Mr. Hardouvelis said the government was in a position to introduce “the gradual lightening of tax burdens on citizens” after six years of “deep and protracted recession.”
