the IMF/EU/ECB representatives last week.
Sources note that the special reserve for contingencies is not sufficient to cover the entire amount of the deficit, and the government seeks for further spending cuts. A contribution by other ministries is not ruled out. More than €500m are needed by the Manpower Employment Organization to meet the growing demand for unemployment benefits, while an amount of €600m is needed by social security organization IKA in order to pay pension until the end of 2011.
IKA has been borrowing recently through repos by the banks, setting a bond of €900m as a guarantee, which matures at year’s end. The troika officials have put this amount into the general government’s deficit, resulting in a deficit of more than €2b for the Ministry of Labour.
The final decisions will be taken within the week, as the negotiations about the medium-term plan, the raising of €3.5b through fighting of contribution evasion and the saving of €2.5b through the reduction of social benefits.
Moreover, Labour Minister Louka Katseli will meet with troika officials on Wednesday in order to determine the final details of the medium-term program.
Note that an agreement with the OECD was signed last week on the review of the social benefits, to provide a legislating intervention in late June.
The troika asked for a new more realistic scenario for the increasing of revenue through the fighting of contribution evasion. Sources revealed that even the law bill for the reform of the Labour Inspectorate has faced strong criticism from the European Union, particularly regarding the implementation of the “labour card” and the reduction the contributions for firms that use the card.
The ministry considers further cutting in the healthcare industry, with the pharmaceutical expenditure reduced to 1.2% of GDP from 2.2% by 2013.
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