Budget in Parliament: Upward revision of the growth rate to 5.6% for 2022

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This is the first budget outside of enhanced surveillance – The main figures of the new budget.

The 2023 budget was submitted to the Parliament by the Ministry of Finance today, Monday, which is the first in the last twelve years to be drawn up outside the framework of memorandum surveillance or enhanced surveillance. At the same time, however, as reported by the ministry, it was drawn up under conditions of high uncertainty, regarding geopolitical developments at the global level.

Thus, it is called upon to compare challenges related to the energy crisis, the inflationary pressure on households and businesses, the health crisis which has led to increased costs in the health system, but also the additional, compared to 2019 and previous years, costs for the necessary defense armor of the country. At the same time, in parallel, it is called upon to maintain the fiscal balance and sustainable development goals, in a year of international slowdown or even recession, but also to support a wide range of reforms to improve the lives and well-being of all citizens.

The main figures of the new budget are as follows:

A growth rate of 5.6% is forecast for 2022, almost double the European average, compared to 5.3% forecast in the 2023 draft budget, 4.5% forecast in the 2022 budget and 3.1% that had estimated in the April 2022 Stability Programme, at a time when harmonized inflation is expected to increase by 9.7% amid international inflationary pressures. The unemployment rate is expected to shrink further to 12.7%, compared to 13.9% predicted in the Stability Program and 14.2% in the 2022 budget.

For 2023, under highly uncertain forecasting conditions, harmonized inflation is expected to increase by 5%, compared to 6.1% for the euro area and 7.0% for the European average, while growth is expected to be 1.8% , compared to just 0.3% estimated for the average of the eurozone and the member states of the European Union, according to the Autumn Forecasts of the European Commission.

The fiscal targets that were set in the Stability Program, regarding the primary result of the General Government, i.e. a deficit of 2% of GDP for 2022 and a surplus of 1.1% of GDP for 2023, are revised to a deficit of 1.6% of GDP for 2022 and a surplus of 0.7% of GDP for 2023. In this way, the fiscal balance is maintained for that period and the necessary resources are channeled, having prudently built safe cash reserves, to meet the challenges in the new year. This fact, it is stated, demonstrates the national responsibility towards the sacrifices of the citizens in the last twelve years, but also to the new generation, to maintain the fiscal balance of the country, relying on the same forces, even in times of adverse international circumstances, such as the one that are going through.

At the same time, the 2023 budget is accompanied for the second year by the performance budget, expanding the evaluation framework of the agencies’ programs through additional measurement indicators and cost-saving actions, as well as expanding the evaluation of the environmental footprint of the agencies’ policies. In addition, the functional classification that was introduced last year in the first degree, is extended to the second degree, so that there is detailed information on the distribution of expenses per sector of the state’s operation.

As the Ministry of Finance reports, it is clear that the risks surrounding the macroeconomic forecasts, both nationally and globally for 2023, are increased and are primarily linked to geopolitical challenges, the evolution of the war in Ukraine, the conditions supply of natural gas to Europe, energy and fuel prices and European monetary policy. However, the Greek economy has shown considerable resilience, supported by the state’s fiscal measures.

The positive development result was supported in 2022 by budgetary measures amounting to 4.8 billion euros to deal with the energy crisis, measures amounting to 4.4 billion euros to deal with the health crisis, but also reforms for the benefit of citizens, as indicative is the double increase of the minimum wage by a total of 9.7% in 2022, the permanent and significant reduction of ENFIA, the extension of the reduction of insurance contributions and the special solidarity contribution, the abolition of the tax on parental benefits-gifts, the reduction of mobile phone fee, the double financial support of vulnerable social groups, the increase of student housing allowance, the extension of maternity allowance in the private sector and the important incentives to extend full employment.

For 2023, the total of fiscal measures, amounting to 3.1 billion euros from national resources and 1.1 billion euros from co-financed resources, announced at the TIF and an additional 1 billion euros for increased costs to deal with increased inflation and of the energy crisis.

In addition, for 2023, the allocation of resources amounting to 8.3 billion euros from the Public Investment Program and 7 billion euros from the Recovery and Resilience Fund is foreseen, of which 3.6 billion euros from the grants section, in which to date, 440 projects and emblematic investments amounting to 13.7 billion euros have been included.

As pointed out by the ministry, the uncertainty surrounding wider geopolitical developments is the most important factor that makes it difficult to make safe forecasts worldwide. In this context, the country’s main weapon of economic defense is prudent fiscal management, directing the resources available to mitigate the consequences of the energy crisis and increased inflation in Greek society and the country’s productive fabric. At the same time, the observance of the realistic fiscal targets is the passport for accessing the markets, ensuring the sustainability of the Greek debt and achieving investment grade, so as to maintain the country’s positive economic outlook for the coming years.

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