The tweaked 2020 draft budget submitted in Brussels on Tuesday appears to be earning the approval of the European Commission.
The draft makes it clear there will be a one-off 5 percent easing of the down payment corporations will pay for 2020. Although the first draft budget and the second forwarded to Brussels refer to 138 million euros for that purpose, it is likely this will grow close to 200 million, depending on the primary surplus overrun in 2019.
A Commission spokesman said on Wednesday that the draft budget fully reflects the creditors’ discussion with the Greek government and that the agreed fiscal rules are adhered to. “In Greece’s case the institutions have extensively discussed the draft budget for 2020 in the context of the enhanced surveillance, in order to ensure that the agreed fiscal rules will be achieved,” he stated.
All tax-easing measures and social interventions, adding up to 1.2 billion euros, have been included in the draft forwarded to the Commission, and the forecast for 2.8 percent growth is the same after the interventions. The measures are projected to benefit growth by 0.5 percentage points, the draft says, while adding 1.8 percent to disposable incomes.
There are also some tweaks in the impact of the corporate tax reduction from 28 to 24 percent, dropping from a cost of 566 million euros to 541 million euros, and in the halving of the tax on dividends (5 percent against 10 percent) that will cost 75 million against a previous projection of 69 million.
The forecast for the 2019 primary surplus has been raised to 3.7 percent (from 3.68 percent) and for next year to 3.6 percent (from 3.56 percent). The national debt is anticipated to slide from 173.3 percent of gross domestic product this year to 167.8 percent in 2020.
As for the possible cost of the verdicts by the Council of State, the second draft says it will be covered by the credit from the Labor Ministry. It added that the original impact from the increase in the minimum salary in employment was limited, but monitoring needs to continue as secondary negative effects could arise.