The 2024 budget foresees wage and pension increases, a three-year freeze, an increase in the tax-free allowance for families with children – An increase in the hospital grant by around 20%, an increase in spending for the education sector as well.
The 2024 budget is the first after 13 years to be drawn up with the dignity of the country having recovered its investment grade. This is an achievement, as mentioned by the Minister of National Economy and Finance Kostis Hatzidakis during the submission of the new budget to the Parliament, which is primarily due to the hard work and sacrifices of Greek society, combined with the prudent and effective fiscal policy of recent years, the successful handling of consecutive external crises and the political stability that the country has achieved.
However, the ministry points out, the 2024 budget is drawn up a few weeks after successive natural disasters that hit the territory in August and September 2023, which demonstrates that the consequences of climate change they will be here and need to be addressed on a permanent basis.
To this end, it is a priority to shield the country against extreme natural phenomena through the creation of more resilient infrastructure, the strengthening of civil protection and prevention. At the fiscal level, it is obvious that provision of relevant funds is needed each year in the budget, strengthening of insurance as well as speed and efficiency of state aid.
At the same time, the international economy is showing signs of slowing down, fiscal risks in European countries are increasing, inflation, although decelerating, continues to remain high internationally, especially in basic food items, while the restrictive monetary policy has a negative effect on credit expansion.
Growth rate of 2.4% in 2023 and 2.9% in 2024
According to the budget text, in this adverse and uncertain international environment, the Greek economy is proving resilient. The growth rate remains close to the targets set in the April 2023 Stability Program and is expected to rise to 2.4% in 2023 and 2.9% in 2024.
Gross Domestic Product in nominal terms is expected to increase from €206.6 billion in 2022 to €222.8 billion in 2023 and €233.8 billion in 2024. At the same time, the Harmonized Index of Consumer Prices is expected to fluctuate slightly lower levels and stand at 4.1% against 4.5% projected in the Stability Program for 2023 and further decelerate to 2.6% for 2024. Investment is expected to grow by 7.1% this year and even more by 15.1% in 2024, while unemployment is expected to decrease from 11.2% in 2023 to 10.6% in 2024.
The 2024 budget, it is added, is called upon to reconcile the goal of fiscal stability, which is the foundation for every effort, with the new needs that are created as well as with the basic project of society, after the inflationary crisis, i.e. the increase of disposable income and wages.
Increase in tax revenue
In 2023, a significant increase in tax revenues was achieved by 9.1% compared to 2022 without increasing taxes, a development that is largely linked to the high growth rates of the Greek economy. For example, according to ELSTAT’s quarterly national accounts data, the total wages of dependent labor show an increase of 7.6% in the second quarter of 2023 compared to the corresponding quarter of 2022. The increase in wages, without affecting competitiveness, strengthened budget revenues, contributing to the achievement of fiscal goals.
For this purpose, they have been included in the budget all the measures that have been announced before the elections to be implemented in 2023 and 2024the measures announced at the Thessaloniki International Fairas additional support measures which were announced later.
Salary and pension increases, three-year freeze, tax-free increase
Catalysts in the direction of income growth in 2024 are expected to act policies such as the increase in the salaries of civil servants, the lifting of the three-year “freeze” for employees, the increase in the tax-free allowance for families with children, the increase in the minimum guaranteed income, the renewed increase in pensions, but also investment resources amounting to 12.17 billion euros through the Public Investment Program (8.55 billion euros) and the Recovery and Resilience Fund (3.62 billion euros), which are expected to flow in the economy by 2024.
In addition, the health sector with an increase in the subsidy of hospitals by approximately 20%, while there is also an increase in expenditure in the education sector.
At the same time, it is pointed out that the major changes that the country needs are prioritized with a series of measures that have been announced to combat tax evasion. In this context, multi-level interventions are instituted which include, among other things, restrictions on the use of cash and the strengthening of electronic transactions, the full implementation of the electronic transfer of accounting records and an increase in the transparency and effectiveness of controls, the tightening of sanctions as well as the reform of the taxation of individual businesses . The aim of the above interventions is the fair distribution of tax burdens and the further strengthening of social policy.
All of the above, the budget states, are carried out without the country deviating from its fiscal goals. Despite the successive crises, the primary result of the General Government in 2022 was set at a marginal surplus of 0.1% of GDP. In the introductory report of the 2023 budget, the primary surplus for 2023 was projected at 0.7% of GDP, while in the Stability Program of April 2023, the primary result was estimated at a surplus of 1.1% of GDP.
According to the latest data on the execution of the budget, the primary result of the General Government for 2023 is estimated to be a surplus of 2,555 million euros or 1.1% of GDP, close to the forecasts of the Stability Program. The overall result of the General Government is estimated to be close to the forecasts of the introductory report of the 2023 budget, due to the increase in General Government interest and is formed at a total deficit of 2.1% of GDP, against 2.0% which was the forecast of the 2023 budget.
Accordingly, the primary result for 2024 is projected to be 2.1% of GDP in line with the objectives of the Stability Program. The fact that the fiscal result of the years 2023 and 2024 remains within the estimates that were reflected in the Stability Program, strengthens the credibility of the country’s creditworthiness towards the international community and rating agencies.
General Government debt is expected to de-escalate impressively from 172.6% of GDP in 2022 to 160.3% in 2023 and to 152.3% in 2024.
The above, the ministry concludes, prove that the country has entered a virtuous cycle of debt reduction and economic growth. Of course, economic activity depends on developments in the international environment and possible external crises. Economic stability and progress can only be ensured if the set fiscal goals are strictly adhered to, while channeling the limited fiscal resources in a targeted manner, with the maximum possible economic and social efficiency.
Seven measures against tax evasion
Interventions are instituted to combat tax evasion, as stated in the introductory report:
These include, among others:
- the completion of the interconnection of cash registers with POS and the extension of the obligation to have an electronic payment system to the remaining branches of the retail market,
- limiting the use of cash by establishing the purchase and sale of real estate exclusively using banking means, the payment of welfare benefits through debit cards and the increase of fines for purchases over 500 euros in cash,
- the establishment of mandatory electronic transmission of accounting records to AADE (myData). In this context, deductible expenses are not taken into account if the documents on which they are based have not been transmitted electronically, while income from business activity cannot be less than what has been transmitted to the platform,
- the digitization of tax authority controls using data analysis and business intelligence tools, combined with information from a multitude of electronic sources,
- the provision of a monetary bonus for citizens who make complaints about falsified cash registers, which result in an audit and the imposition of a fine;
- the tightening of sanctions for forgery, fuel smuggling or control obstruction as well as the activation of the digital consignment note and
- the reform of the taxation of sole proprietorships, which is expected to secure additional revenues of at least 600 million euros (while a reduction of the business tax for sole proprietorships is foreseen with an estimated cost of 106 million euros). The additional revenue is expected to be allocated mainly to support health and education costs. It is noted that an increase in the grant to hospitals by 481 million euros has been foreseen in 2024 compared to 2023 (a 20% increase), while the increase in the regular budget of the Ministry of Education, Religion and Sports amounts to 255 million euros.
See in detail HERE the highlights of the budget
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