Boosted primary surplus goal
Gov’t sends a message of fiscal and economic stability to rating agencies via the budget
Increases in wages and pensions and relief amounting to 2.13 billion euros are foreseen in the draft budget for 2024, which was submitted to Parliament on Monday.
Employees in the public sector will see wages increased by 6.5% on average, while employees in the private sector who complete three years will also have higher salaries.
The increase in pensions will be at least 3.1% – for those who do not have a “personal difference” – for families with children the tax-free limit is increased by €1,000, while the Single Property Tax (ENFIA) is reduced by 10% for those who insure their homes.
At the same time, value-added tax of 13% and a non-permanent residence tax is imposed on the short-term rental income of individuals and enterprises with three or more rented apartments. Individuals who have three or more rented apartments are also required to start a business.
Thanks to the outperformance of tax revenues by €4.6 billion in 2023, a primary surplus of 1.1% of gross domestic product is forecast for this year (as opposed to the previous target for just 0.7%) and 2.1% of GDP for 2024, while the growth rate is set at 2.3% this year and 3% in 2024. This message of fiscal and economic stability is intended to be forwarded to the rating agencies (S&P and Fitch) that are set to give their verdict on Greece in the next couple of months.
The draft budget provides for no new handouts and a senior Finance Ministry official railed against a new private debt arrangement (“it’s bad for the payment culture,” he stressed) and reminded that horizontal support measures are no longer allowed by the European Union.
However, as part of the final budget, which will be tabled on November 21, the government will decide whether to extend the application of the reduced VAT rate of 13% on transport, coffee and soft drinks in catering, entertainment and gyms. The government is reportedly considering extending only some of the above services.
