Ministry of Finance: At 23.5 billion euros for 2023 alone, Tsipras’ announcements – From a surplus, to a deficit of more than 10%

At 23.5 billion euros only for 2023, the Ministry of Finance calculates its announcements Alexis Tsipras at TIFpredicting that the possible implementation of the measures presented by the president of SYRIZA, will lead from a budget surplus to a deficit of more than 10% every year.

In more detail the press release issued by Ministry of Finance on the occasion of the statements of Alexis Tsipras:

Mr. Tsipras has exceeded all limits of fiscal logic in inexpensive announcements: 23.5 billion euros of measures for 2023 and an additional permanent fiscal cost of 10 billion euros for each of the following years. He managed to outdo himself in the 2014 Thessaloniki “deception” Program, amounting to 13.5 billion euros. Therefore, Mr. Tsipras is telling lies (you can’t “deceive” twice) that lead directly to new memorandums, just as he did in 2014, without any respect for the sacrifices of the Greek citizens.

In total, the fiscal cost of the measures he announced for 2023 alone amounts to 11.5 billion euros and an additional 12 billion euros for the electricity cap – which he avoided costing, total: 23.5 billion euros! While the permanent fiscal cost, without the ceiling on electricity for each of the following years amounts to 10 billion euros. And this, under the assumption that the insurance contributions increase again by 3 units and the solidarity contribution is reinstated, otherwise the permanent fiscal cost increases to 12 billion euros.

What do the above mean?

They mean a worsening of the country’s primary outcome by 11.2% in 2023 (from a surplus of 1%, we are headed to a deficit of more than 10% – worse than 2020 which was a pandemic year) and a worsening of the primary outcome by 5% for each of next years (from a 2% surplus, we are headed to a 3% deficit in 2024 and beyond).

In other words, the country is placed outside the targets of the stability program, unable to cover its financial needs and with a drastic cut in the Recovery Fund due to a brutal violation of the fiscal targets and the undoing of the agreed reforms.

Analytically:

Mr. Tsipras announces the privatization of PPC, a PPC that he himself left bankrupt, with the parallel establishment of a ceiling on retail sales. This means that the difference in the cost of production, which depends on the international prices of natural gas, from the cost of sale, will directly burden the State Budget. If retail prices are set at pre-crisis levels and with today’s natural gas prices, this means fiscal costs and an increase in the country’s primary deficit of 12 billion euros per year!

More specifically, the country imports 70 TW of natural gas per year, of which 50 TW is directed to electricity generation and the cost of importing from 30 euros per Mwh is currently at 200 euros per Mwh, while a few days ago it was over 300 euros per Mwh. This means an increase in costs, at today’s prices, of around 12 billion euros per year, which will constitute a direct deficit of the state budget.

At the same time, Mr. Tsipras announces intervention in the Greek electricity exchange with a price ceiling and disconnection of the wholesale price of electricity from the price of natural gas. Let’s inform K. Tsipras that this is exactly what the successful Greek Model is already doing that other European Countries are trying to copy today.

Mr. Tsipras proposes an additional ceiling on the international price of natural gas. Will this Mr. Tsipras be done unilaterally by Greece, intervening in the Dutch natural gas exchange? Or will the country run out of natural gas and electricity?

Mr. Tsipras announced taxation of the excess profits in Energy and that through this mechanism he will collect 3 billion euros. Let us inform Mr. Tsipras that through the Greek Government’s profit retention mechanism, in just 2.5 months, 2 billion euros have already been collected and by the end of the year it is expected to collect about 5 billion euros, money that is directed directly to discounts on citizens’ electricity bills.

But let’s look at the other measures announced by Mr. Tsipras:

• Fuel tax reduction at the lowest EU rate (motor oil, heating oil, gasoline, natural gas): 1.5 billion/year.

• Non-payment of VAT on agricultural oil: 160 million/year.

• Reduction of VAT on food: (reports 960 million/year): The cost based on tax revenues amounts to 1.3 billion euros.

• Inflation of civil servant salaries (reports 1.3 billion for 2023 with 8.9% inflation for 2022): The salary expenditure of the public sector is 19 billion euros per year, so the cost is 1.7 billion euros in the first year and is increasing in the following years.

• Retrospective pensioners: 2.5 billion in 3 annual installments (states 830 million for 2023). The expenditure is recorded in the budget in the year the relevant legislation is made, regardless of when these are paid in cash, therefore the cost is 2.5 billion euros for 2023.

• 13th pension: 830 million/year (net).

• Adjustment of pensions: 600 million for 2023.

• Tax-free increase to 10,000 for those already covered by tax-free: 223 million / year.

• Establishment of a tax-free allowance at 10,000 for Professionals – self-employed: 160 million/year.

• Abolition of pretension fee (reports 400 million/year): the cost amounts to 450 million per year.

• New NHS (payroll, recruitment) – 2 billion over four years – 500 million for 2023.

• Education – holistic plan: 291 million for 2023.

• Strengthening of the disabled: increase in disability allowance of 140 million/year (the rest of the measures for the disabled consider that they will be eligible to finance from a recovery fund).

• Mother’s Allowance (extension and increase): 325 million/year.

• Extension of the maternity allowance to the self-employed, freelancers and farmers from 4 to 9 months: 70 million/year.

• Special maternity leave for self-employed, self-employed, farmers: 90 million/year.

• Infant and school meals (extension): 380 million/year.

• Housing policy: rent allowance 255 million/year.

Fiscal cost of measures for 2023: 11.5 billion euros and an additional 12 billion euros for the electricity cap, total: 23.5 billion euros!

Permanent fiscal cost without the ceiling on electricity for each of the following years: 10 billion euros!

In these, he has apparently not included the 2.1 billion euros in the cost of reducing insurance contributions and solidarity contributions, unless he intends to restore them.

This marks an 11.2% worsening of the country’s primary outcome in 2023 (from a 1% surplus, we are headed for a 10% deficit – worse than 2020 when we had a pandemic) and a 5% worsening of the primary outcome for each of the following years (from a surplus of 2%, we are led to a deficit of 3%).

In other words, the country is placed outside the objectives of the stability program and directly unable to meet its financial needs. Therefore, Mr. Tsipras is either lying or proposing new memoranda, just as he did in 2014, without any respect for the sacrifices of the Greeks and without learning from his mistakes.

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