Just last month, Greece’s Economy and Finance Minister Kostis Hatzidakis presented the budget plan for 2025 to the parliament’s budget committee. Now he has to revise the plan again – because he has too much money, German newspaper Handelsblatt reports.

The finance minister recently presented the preliminary budget figures for the first ten months of this year. Many of its European Union counterparts are likely to envy the figures: Between January and the end of October, Greece ran a budget surplus of 6.1 billion euros. The budget had foreseen a deficit of 2.2 billion euros.

The primary budget balance, which does not include debt service, closed with a surplus of 13.5 billion euros. The finance minister expected a primary surplus of 6.1 billion euros. Lean budget management also contributed to this result: Hatzidakis spent 4.8 billion euros less than budgeted in the first ten months.

For the whole year, the Finance Ministry of Athens expects tax revenues of 68 billion euros instead of the originally forecasted 66.2 billion euros. Next year, the amount is expected to rise to 70 billion euros.

While the European Commission still forecasts in its latest autumn report a budget deficit of 0.1% of gross domestic product (GDP) for next year, government circles in Athens now expect a balanced budget or even a small surplus.

Greece achieves higher growth than forecast

There are two main reasons why tax revenues have risen so sharply. The first is the strong economy. The Brussels Commission forecasts economic growth of 2.1% for Greece this year. The government itself predicts 2.2%. This places Greece well above the EU average of 0.9%. For the next two years, the Commission expects growth rates of 2.3 and two percent in Greece.

The second reason for the increase in revenue is the unexpectedly great success in the fight against tax evasion. In particular, the digitization of financial management and the trend towards cashless transactions in retail and between service providers promoted by the government are bearing fruit.

In particular, these successes can be seen in the VAT collected: From 2017 to 2021, the country almost halved the VAT gap from six to 3.2 billion euros, according to the European Commission. The VAT gap is the difference between the theoretically possible revenue and the actual revenue collected.

The public treasury is still losing about 15% of the VAT due. However, the government wants to reduce the rate to nine percent by 2026. According to the European Commission, the average VAT gap in the EU in 2021 – more recent figures are not yet available – was 5.3 percent.

Finance Minister Mr. Hatzidakis had promised additional revenue of between one and 1.2 billion euros this year from the fight against tax evasion. The actual amount will be about two billion. Next year, additional revenue is expected to rise to 2.3 billion. This will give the finance minister more room to maneuver for tax cuts and pension increases.

Faster debt repayment than expected

Privatization also contributes to the good cash position. With an expected revenue of 5.8 billion euros, 2024 will be the most profitable year since the start of the privatization program in 2011. 3.27 billion euros alone was collected by the finance minister in October for the 25-year concession of the Athens highway operation Attiki Street.

Proceeds from privatization will be used to reduce debt. This is provided for in the loan agreements with international lenders, which saved Greece from the threat of national default several times during the debt crisis of the 2010s. Greece is making faster progress than expected in repaying its huge debts .

On December 15, the finance minister wants to repay bilateral loans from euro partners totaling €7.9 billion ahead of schedule. These are loans from the first aid package put together in 2010, which are not due before 2026 to 2028, as planned.

Next year, the country is expected to repay another five billion euros to eurozone countries ahead of schedule, Prime Minister Kyriakos Mitsotakis announced Monday at the “New Era of Greek Banking” conference organized by Bloomberg in Athens.

According to European Commission calculations, this will reduce the country’s debt ratio to 146.8% of GDP next year. This will be the lowest level since the start of the sovereign debt crisis in 2010.