By Chrysostomos Tsoufis

A few days after Daniel’s passing, when the extent of the destruction began to appear, in SEC there was a numbness. The ministry’s leadership said the target for the primary surplus this year is returning to the original target of 0.7%. 20 days later, through the draft 2024 budget, the government announced to the public, markets and rating agencies that it would finally hit the more ambitious target of 1.1%. What changed;

-Initially the Commission showed the necessary flexibility and allowed a significant part of the first compensations, around €250 million, to be covered by co-financed tools such as the NSRF and the Recovery Fund, easing the fiscal burden
-Budget execution data over the summer months showed that tourism workers were paid significantly better this year by increasing income from withheld income tax and social security contributions.

These 2 developments sealed the achievement of 1.1% which is music to the ears of the rating agencies who decide on October 20 (S&P) and December 1 (Fitch).

The way 2023 has turned out, things could very well get much, much worse. Election year, 2 supplementary budgets, unprecedented weather events leading to massive disasters. Nevertheless, the economy, as Kostis Hatzidakis said, overpaid by €4.5 billion:

-€1 billion from VAT collections. Roughly, this comes from the increase in consumption by €500m (at constant prices), €300m from the increase in tourists (it is estimated this year that receipts from tourism will exceed €19bn from €17.7bn last year) and €200m from the precision
-€1 billion from the personal income tax. Salaries increased by 5.2% last year, so the public coffers are also “inflating”.
-€2.1 billion from corporate income tax. Here the lion’s share is occupied by the revenues from the refineries. €630 million was the extraordinary levy imposed on them and €510 million was the income tax. It is typical that the business turnover in 2022 jumped to €460 billion from €340 billion in 2021
-€400m from other sources. For example, the classifications of I.X. are up by 33% compared to last year.

Given that the government wants to keep a close eye on the primary surplus, additional benefits by the end of the year should not be expected unless the final figures show above 1.1%.

But “seeing money” also applies until the end of the four years. The government has reserves to cover the abolition of the service charge (€480m) and the reduction by 1 unit of the insurance contributions (€500m). New (pre-election) benefit cycle means that the government’s big bet, limiting tax evasion, must pay off.

The financial staff has cleverly not set a revenue target from the measures it has already announced and are expected to be passed by the end of the year, and even more cleverly has set the expected revenue bar relatively low at €2bn/year at the end of 2026.

Condition; To narrow the so-called gap VAT from the 15% that is now calculated to the 9% that is also the average.