One budget plan includes pre-legislated pension cuts, which the Greek government have previously agreed to, according to the International Monetary Fund.

While the second does not include pension cuts, putting the cash-strapped nation in the firing line of confrontation with its creditors and European institutions.

Pension cuts were due to start in January and proved to be a sticking point when it came to reaching an agreement with investors.

However, Greece has remained positive about its budget plans this week and pledged to stick to fiscal targets that had been agreed with its creditors.

The Greek economy is expected to grow up 2.5 percent in 2019, according to the draft plan, quoting a GDP growth rate for this year of 2.1 percent.

Athens is further arguing that the economy will exceed the target of a 3.5 percent primary surplus in 2019, which the finance ministry is using as leverage to suggest that pension cuts are not necessary.

The draft plan projects the primary surplus as being estimated at 3.56 percent of GDP for 2019 without the pension cuts, but with the pension cuts applying, the primary surplus is projected to be 4.14 percent of GDP.

It read: ”The tax burden relief and the lowering of social security contributions would not be possible without the fiscal performance of the last three years, the fruit of the sacrifices of Greek citizens.”

Carsten Hesse, European economist at Berenberg, told CNBC: “The primary budget surplus has been better than expected over the last years, reaching 4.2 percent in 2017 versus a 1.75 percent demand by the official lenders.”

Eurogroup head Mario Centeno described pension cuts in Greece as a “fiscal measure” as he declared the financial situation to be “much better” than when the measures were agreed.

Mr Centeno said: “Pensions are not a structural policy measure as the pension system has already been reformed.

“It is a fiscal measure. We all know the fiscal targets that have been set for this year and next and we all know that the situation is much better than it was 19 months ago, when this decision was made.”

Greece’s public debt pile in predicted to fall from 183 percent of GDP this year to 170.2 percent next year.

The European Union, the European Central Bank and the International Monetary Fund loaned Greece a total of 289 billion euros (£259 billion) in three successive programmes in 2010, 2012 and 2015.

Daily Express :: Finance Feed

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