The August primary surplus and the unknown “X” of the budget

By Chrysostomos Tsoufis

The officials of the General State Accounts Office were rubbing their eyes when they found out in the morning that they had to inform the Theodoros Skylakakis that …suddenly the state budget appears primary surplus!! To be precise, the surplus is of the order of €10 million when the goal that had been set was for €5.9 billion deficit.

This result has its explanation in the vertiginous progress of the revenues and of course it filled with smiles the financial staff who, however, know and say it out loud that the appearance of a primary surplus in August under these conditions is a purely opportunistic development. In any case, the income in August recorded an increase of €1.4 billion or 32.6% against the target. In total, in the first 8 months of the year, the state coffers have received €5.6 billion more than what was estimated by the Ministry of Finance.

This image is due to:

• In the best performance of the previous year’s taxes collected in installments until the end of February 2022
• In the extension of the deadline for the payment of traffic fees until the end of February 2022
• On the best performing tax collection this year (which categories are doing better and how much we will know in about 2 weeks when the final figures for August are released)
• In the collection by the end of August 2022 of four of the eight installments of the ENFIA, which were predicted to be collected from September to December of this year. As far as prepayments of income tax are concerned, these have not yet been clearly seen, but the General Accounting Office considers them to be high as well.

“This performance is compatible with them high growth rates recorded by the economy in 2022while the advance collection of revenues for the following months adds security to the implemented fiscal policy in a particularly uncertain period in relation to international economic developments” was the comment of Mr. Skylakakis. The uncertainty in international economic developments is of course the price of natural gas which remains the unknown X and makes policy design difficult.

The budget is expected to receive and new reinforcements this time on the spending side. The first calculations show that for the new subsidy scheme for electricity bills that will be effective from October, much less money will be needed from the state coffers, around €200-300m compared to the €800m it had to contribute in September. According to the data so far, we are moving towards a subsidy according to consumption – the lower the consumption, the higher the subsidy – and a bonus subsidy to households that achieve savings of 15% compared to last year.

There will also be a form of subsidies for natural gas consumers, although here things are complicated. For example, it is difficult to give a savings bonus as there are different types of consumption, with some households having autonomous burners on their balconies, while other apartment buildings have replaced central heating with natural gas, so it cannot be calculated whether someone is saving or not.

The relevant announcements will be made next week by the Ministry of Energy

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