FINANCE

Fiscal space for more support

Last year’s budget performance and this year’s takings allow for some additional subsidizing

Fiscal space for more support

The government has secured more fiscal space for support measures against energy and commodity price hikes thanks to the better-than-expected data on the 2021 budget deficit announced by Eurostat on Thursday. The measures will also be funded by the expected revenues from emissions charges and the renewable energy source account.

According to the data the Hellenic Statistical Authority (ELSTAT) forwarded to Eurostat, last year’s primary budget deficit amounted to 5% of gross domestic product, against a target for 7% and down from 7.2% in 2020. That means it was some 3.6 billion euros lower than anticipated – an amount that may not be transferred to this year’s budget but will give a further boost to state revenues that have already emerged – and shortens the distance to this year’s target. That primary deficit target has been revised to 2% of GDP.

The positive surprise for 2021 also attributes credibility to government policy: A senior Finance Ministry official commented on Thursday that the data show that the country’s measures may have increased its expenditure but have yielded results too.

The public debt also fared better than expected in 2021, closing at 193.3% of GDP, per ELSTAT, compared to a target for 197.1% and to 206.3% in 2020. In absolute figures it amounted to €353.39 billion. GDP came to €182.83 billion.

The supplementary budget and the new deficit target to be sent to the European Commission next week will allow for an extra €750-800 million for support measures, according to ministry sources. On top of that, the revenues from emissions and the Special Account for Renewable Energy Sources (ELAPE) are estimated at €2.2 billion for May, creating €3 billion in leeway for measures of support, which could become even greater thanks to the taxing of energy suppliers’ excessive profits.

The measures have not been determined yet, in anticipation of any European Union decision for EU-wide support, though the chances for that are slim. The decisions on Greece’s measures are expected in May.