New finance minister has cushion to work with
The new government begins its term with a budgetary cushion of almost 3.7 billion euros, as the definitive January-May budget execution data showed on Monday a primary a surplus of €2.3 billion, instead of a primary deficit of almost €1.4 billion euros the budget had targeted.
Of course, in the meantime, last April’s Stability Program revised the budget estimate, and instead of a primary surplus of 0.7% of GDP, it projected 1.1%, so the overshoot is smaller. Sources from the State General Accounting Office, in fact, estimated that the result is consistent with the Stability Program and noted that whether there will be an excess and fiscal space in the end or not will be seen after the summer, after the collection of tax revenues for income, and ascertain the course of tourism in this season.
The European Commission in its spring forecasts placed the primary surplus for 2023 at 1.9% of GDP. If true, a budgetary space of around €2.5 billion will be created, and the question is how the government will utilize it.
New National Economy and Finance Minister Kostis Hatzidakis, who takes office on Tuesday, will be have to decide whether to allocate the fiscal space for support measures or choose to reduce the debt through a higher primary surplus. The latter has been proposed by the OECD, as Greece remains an over-indebted country, while the European Commission has indirectly suggested the same. Part of the surplus will be needed to cover the costs of the second election and some of the pre-election measures announced by the government that are in place this year, such as the Youth Pass.
The issues of state expenditure will be managed by new Deputy Minister Thanos Petralias, until now secretary-general at the ministry.
For the time being the new administration at the ministry will proceed with the drafting of the first bill to increase the tax-free allowance by €1,000 per year for families with children, as well as for the gradual abolition of the fee for practicing a profession, known as “telos epitidevmatos.”
