The 2018 budget is based on shaky foundations according to economic analysts, while additional taxes and spending cuts adding up to approximately 1.9 billion euros are already on the way.
Forecasts of a 2.5 percent growth rate next year and an increase in the social security fund surplus (that appeared out of the blue to save this year’s budget) are the main sources of concern for the new budget, economists say.
The so-called “white hole,” or the unforeseen surplus of the social security funds, boosted the budget by about 2 billion euros above forecasts this year: While the midterm fiscal plan provided for a social security fund deficit of 941 million euros, it now appears the system will show a surplus of 1.085 billion. This “miracle” is, according to the government, due to the fewer-than-expected retirements and the increase in employment.
Therefore the Finance Ministry is optimistic that the social security funds will have a surplus next year too, of 1.785 billion, against a midterm plan provision for a surplus of just 175 million euros.
However, main opposition party New Democracy has pointed out that some 300,000 pensions remain outstanding, totaling more than 2 billion euros.
The social security system’s improved picture this year is also due to the double contributions that many workers had to pay, which was an extraordinary measure.
Economists question the growth forecast too, given that 2017 projections proved too optimistic: Instead of 2.7 percent, the economy is now officially expected to grow 1.6 percent this year, while some authorities are revising this to between 1 and 1.5 percent. For 2018, the budget provides for a 2.5 percent economic expansion and a 1-billion-euro increase in revenues, but this will hinge on investments soaring by 11.4 percent and consumption increasing despite the new tax measures.
All those estimates have also been adopted by the eurozone, in the hope that Greece will emerge from its bailout program in August.