07 February, 2006
The government intends to initiate a debate in parliament on reform of the social insurance sector, national economy and finance minister George Alogoskoufis said Monday, addressing an event organized by the Constantine Karamanlis Institute of Democracy at a central Athens hotel.
According to Alogoskoufis, the social insurance issue was a "time-bomb", while the system's actuarial deficit was estimated at 200 percent of GDP.
The problem, he explained, was that society would be called on to pay the pensions, and cited a study according to which in the year 2050 expenditure for pensions would double to 25 percent of GDP from the present 12.5 percent, requiring the contribution from the budget to triple to 15 percent from 5 percent today.
Given those developments, the social insurance issue was a major problem and a responsible attitude was required on all sides in order to resolve it, Alogoskoufis said, adding that the government has committed itself to advance dialogue on the issue. He also noted that his ministry will finance a commonly acceptable study on the social insurance problem.
Alogoskoufis said that the Greek economy was facing several challenges, such as the high public debt, the deficit, but also the rigidity caused by the over-inflated public sector.
Between 1993 and 2004, the number of civil servants jumped by 25 percent, or 120,000 persons, but without a parallel reduction in the unemployment rate, he said, adding that the economic policy of the past had proved ineffective and inefficient.
The minister also spoke of mismanagement in the public utilities and organizations (DEKO), and, outlining the targets of the present government's economic policy, said that the conditions were now being created for boosting entrepreneurship and extroversion of the economy.
He further noted the government's initiatives in such areas as promoting collaborations between the public and private sectors, the new investments law, and the reduction of taxation.
Alogoskoufis described tax-evasion as a large wound of the past, adding that the government's efforts had started to yield, with tax revenues marking a 17.8 percent rise in January 2006. He also said that taxation on physical entities would be reduced in 2007.
Source: Athens News Agency