In 2022, Greece recorded the largest pan-European fiscal improvement, noted the finance minister
A “distance” of around 3.4 billion euros was “covered” by the Greek economy last year, as the primary deficit for 2022 from the forecast for 1.6% of GDP (in the budget) was zeroed out, as mentioned by Finance Minister Christos Staikouras .
And which “gap” may widen further if the State Budget Office’s estimates in Parliament of a marginal primary surplus in the 2022 budget are verified.
This development makes it easier to aim for a General Government surplus of 0.7% of GDP this year (the announcements from Eurostat will be made on April 24), while it gives a “signal” to the markets for the recovery of the investment grade this year.
This fact can bring an annual fiscal benefit of 900 million euros to 1 billion euros, as it will lead to lower borrowing rates for the State.
Regarding the reversal in the primary result of 2022, the Minister of Finance points out in his exclusive statement to APE-MPE that “the better fiscal result compared to previous estimates is mainly due to the higher growth”. And he adds that “this helps the economy and society”.
Indeed, there was a better performance of the Greek economy in terms of GDP last year and the first estimates of ELSTAT speak of a growth rate of 5.9% (from 5.6% which was the last target). This development resulted in the substantial exceeding of revenue targets, while at the same time the GDP was estimated for 2022 at 187.278 billion euros, but the first measurements of ELSTAT “show” 208 billion euros, affecting the ratio of the deficit to the GDP.
At this point, Mr. Staikouras reports to APE-MBE that “one of the main axes of the government’s economic policy, from the beginning of its term, was the implementation of a prudent fiscal policy. A policy that, due to successive external crises, had to be combined with the brave and effective support of society and the economy against the effects of the crises. Having succeeded in providing this support, we emphasized the stabilization and gradual improvement of public finances.
And we succeeded. In 2022, Greece recorded the largest pan-European fiscal improvement, bringing the fiscal deficit to zero, despite the fact that the social support measures were among the most generous in Europe. This is yet another tangible proof of the high resilience, the significant progress and the strong dynamics of the Greek economy, which were conquered thanks to the hard, methodical effort of all of us – citizens and the state”.
A second parameter for (at least) zeroing the deficit is the fact that Eurostat has fiscally “written” the last installment of debt relief measures in 2022, when the decision was taken by the Eurogroup and the ESM. There is also the participation of the HFSF in the imminent increase of the share capital of the Bank of Attica. On December 22 last year, an amount of 329 million euros was transferred from the State to a bank account, affecting the cash but not the financial result. According to Eurostat, this amount will be counted in the fiscal result of 2023.
The “bet” now is the recovery of the investment grade, with the president of the Eurogroup Pascal Donahue expressing the belief that the investment grade for the Greek economy will come soon. The rating agency Standard & Poor’s may, according to analysts, give the investment grade on April 21, when it will publish its report on the Greek debt. Although, other analysts estimate that the investment level will come after the parliamentary elections.
Finance Minister Christos Staikouras believes that it is absolutely possible to reach the investment level in 2023. Specifically, in his statement to APE-MPE he points out that “the Greek economy is now growing at one of the fastest rates in Europe. This is to be added to the drastic decline of public debt as a percentage of GDP by 45 percentage points in three years. A performance that is also mainly due to growth and is a record in the history of the eurozone.
The above, together with the building of strong cash reserves and the change of the country’s production model – with a significant increase in investments and exports – as well as the return to European normality, after the lifting of capital restrictions, the early repayment of the International Monetary Fund and the end of enhanced supervision, make it entirely possible to reach investment grade by 2023.”
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