By Chrysostomos Tsoufis

The new fiscal rules until 2028 impose a tight fiscal “suit” on our country as reflected in the new Medium-Term Structural Plan.

And how tight the suit is is no longer determined by primary surplus targets as we used to, which become secondary.

Now everything depends on spending limits – how much more a country can spend each year than the previous year – which are inflexible and non-negotiable.

For Greece and the next four years, the magic number is €13.8 billion as the government, after negotiations with the Commission, managed to increase the initial limit by €4 billion.

Especially for 2025, the negotiation offered an additional €700m – which also “allowed” the Prime Minister’s announcements to the TIF, while for the years 2026, 2027 and 2028, the additional “space” is approximately €1.1bn.

Thus, the increase in expenses for the next four years is distributed as follows:

2025: €3.7 billion
2026: €3.7 billion
2027: €3.2 billion
2028: €3.2 billion

Unfortunately, all this does not mean that all of these €4 billion can go to benefits and tax reliefs.

This is because every year the amounts of the increases in operating costs, pension costs and defense costs must be deducted.

In addition, the cost of some measures that have already been announced must be deducted, such as the new reduction in social security contributions in 2027 at a cost of €230m and the annual salary increases of civil servants following the minimum wage at a cost of €300m
If all these are taken away, there is less than €1 billion left a year for new benefits.

For example, in 2026 – with an increase limit of €3.7 billion as mentioned above – it is expected according to the first estimates:

€1 billion increase in operating expenses
€1.4 billion increase in pension costs
Increase of €480m

There are therefore about €820m left to be utilized and as explicitly stated in the Medium-Term Program, a large part of this concerns measures that have been announced.

In the event that one year the government decides to spend less, it can “carry over” the difference to the next year.

It cannot do so in 2025, which is the first year of implementation of the 4-year fiscal plan.

On the other hand, spending more than the target is not allowed.

Any additional expenses above the permissible limit should be compensated by measures to increase revenues, while any measures to decrease revenues should be compensated by reducing expenses.

Cyclical increases or decreases in revenue due to the economic cycle (eg higher or lower growth rate) do not affect the spending ratio and target.

The suffocating movement frameworks can only be… .relaxed by the effective crackdown on tax evasion. The increase in revenue from cracking down on tax evasion is considered permanent so they will be allowed to go to aid the citizens, so they can go towards reducing taxes.

Somehow, 2027 – the year of the elections – is emerging as a milestone year, as according to the estimates of the Ministry of Finance, there will be an increase in revenue by €2.5 billion. And in this way the government will also gain a great advantage over its opponents in order to stay in power.

In theory, additional small leeway may also come from the spending review. In other words, the evaluation of how the state’s revenues are spent.

The review of operational costs – with Kostis Hatzidakis having made reference to the use of state vehicles -, pharmaceutical costs and electronic prescribing as well as local government costs with the operation of the expenditure observatory can lead to savings.