A fiscal space of 880 million euros is created immediately – The drop in energy prices is in favor
By Chrysostomos Tsoufis
A close reading of the Medium-Term Fiscal Stability Program for 2023-2026 sent to Brussels by the government shows that the ground is being prepared for further easing within the year, after the elections of course.
In the text of the IDP, it is stated that the primary surplus for this year will reach, based on current data, 1.1% of GDP. But as it is explicitly stated, the official target remains at 0.7%, which means that a fiscal space of around €880m is immediately created, which the next government can utilize as they see fit.
It also creates additional fiscal flexibility the significant drop in energy prices. It is characteristic that the budget was structured based on the assumption of an average natural gas price of €120/Mwh. We are now in May, and natural gas has fallen below €40/Mwh. As a result, it is stated in the MIA that in the end much less money will be needed from the Green Fund to subsidize the electricity bills of households and businesses than was initially calculated, approximately €1.7 billion against €7.65 billion. This means that it is almost certain that the €1 billion of the reserve earmarked to deal with the consequences of the energy crisis will not be needed and can also be a golden reserve of future aid.
Of course, fiscal space can also arise during the year from other sources such as e.g. higher than the estimated growth or more income from tourism (the EOT estimates an additional €2 billion compared to 2019).
Based on the BDS o growth rate this year it will reach 2.3% and will rise to 3% in the two years 2024 and 2025 while the primary surplus from 2024 onwards will exceed 2% without additional taxes and surcharges and the projections include the cost of the increase in pensions every year at the level of 50% of the sum of inflation and growth as well as the redesign of the payroll in the State which leads to increases of €500m.
On the contrary, the Mid-Term forecasts do not include the announcements made by the ND in the context of the pre-election process (nor, of course, the announcements of multiple fiscal costs by SYRIZA) which are calculated at 0.1% of GDP for 2024 and 0.3% of GDP for in the years 2025 and 2026.
Between them :
-The tax-free increase by €1000 for families with children
-The increase of the minimum guaranteed income by 8%
-The gradual abolition of the pretension fee
-The gradual reduction of 1% of insurance contributions
– The increase of the maternity allowance for freelancers
These measures, the Ministry of Finance emphasizes in a statement, do not endanger the medium-term objective of primary surpluses in the region of 2%.
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