SMPs and ANFAs may be used to bridge next year’s budget gap

SMPs and ANFAs may be used to bridge next year’s budget gap

The government is seeking some vital fiscal space that will allow it to implement its tax cuts program, especially for next year, and it is in this context that it is examining various ideas compatible with the assurance spokesman Stelios Petsas gave on Tuesday that the target for a primary surplus of 3.5 percent of gross domestic product would be achieved without a reduction in the tax-free threshold or any social handout cuts.

Next to spending cuts – that will be the top consideration of the government – and the expansion of the tax base, mainly through bolstering online transactions, sources say the Finance Ministry is considering a proposal that would go a long way toward bridging the fiscal gap: The inclusion in budget revenues of eurozone central banks’ profits from their Greek bond holdings (SMPs and ANFAs).

That is an amount reaching up to 1.3 billion euros per year, covering much of the gap projected to be created in 2020 and expanding further with the new government’s tax cuts. Former finance minister Euclid Tsakalotos spoke of a fiscal gap of 1.8 billion euros in 2020 during the parliamentary debate on the government’s policies.

The SMPs and ANFAs are among the measures seen easing Greece’s debt and are supposed to be returned to Athens every six months provided Athens implements the reforms it has committed to in the context of enhanced post-bailout surveillance; yet they are not factored into the budget revenues.

The proposal is still in its early stages and has not yet undergone any examination, while its approval is not certain. However, sources say it was placed on the negotiating table with the creditors last week.

European sources said the creditors – upon their departure from Athens last week – expected no fiscal gap for this year, but are waiting to see how the government will cover the projected shortfall for 2020.

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