ECONOMY

Extra cash destined to plug holes

extra-cash-destined-to-plug-holes

The final draft of the 2020 budget, which the government tabled on Thursday in Parliament, projects a primary surplus overrun of 436 million euros for this year.

Although that figure is slightly higher than the estimate in the first draft a month and a half ago, the Finance Ministry again stressed that anyone still nursing high hopes regarding the size of the so-called social dividend to be handed out would be sorely disappointed.

Ministry sources made it clear that out of this amount, some 150-200 million euros will be paid to Public Power Corporation for its state-subsidized services and another 200 million is likely to be set aside as a safety cushion for extraordinary expenses.

Based on that, the remainder will be much smaller, with the same sources noting that the government will not follow the policy of handing out the primary surplus excess in a lump sum; instead it is directing any extra cash to where it is most needed, such as the 200-million-euro discount on the Single Property Tax (ENFIA), the payout of the 68-million-euro heating oil subsidy and the 138-million-euro reduction of the corporate tax deposit. The sources stressed that the remainder will be distributed in a targeted fashion to the weakest members of society, as Prime Minister Kyriakos Mitsotakis has stated. The final decisions will be made next month by the PM himself.

Of course certain uncertainties remain, the same sources added, as December will see spending of 2.7 billion euros while 2019 revenues of 10.11 billion are expected to be collected by end-February 2020.

The final draft budget provides for a primary surplus of 3.58 percent of gross domestic product, reducing next year’s overrun to just 0.08 percent or 146 million euros, which will be a safety cushion.

It also provides for tax cuts of 1.18 billion euros, including the reduction of the basic tax rate from 22 to 9 percent and the trimming of social security contributions by about 1 percent for full-time salaried employees.