The Ministry of Finance submitted today, Monday, November 21, 2022, for discussion in the Greek Parliament State budget 2023 with growth estimates for this year at 5.6% and inflation at 9.7%. For the next year, growth is forecast at 1.8% and inflation at 5%.

In addition, the fiscal targets set in the Stability Program for a primary deficit of 2% of GDP for 2022 and a primary surplus of 1.1% of GDP for 2023 are being revised to a deficit of 1.6% of GDP for 2022. and a surplus of 0.7% of GDP for 2023. According to the Ministry of Finance, in this way the balance of the budget for the period under review is maintained and the necessary resources are directed, prudently creating safe cash reserves, to solve problems during the new year.

High uncertainty

The Ministry of Finance notes that the budget for 2023 was drawn up in conditions of high uncertainty regarding geopolitical events at the global level. It is designed to bring together the challenges of the energy crisis, inflationary pressures on households and businesses, a health crisis that has led to higher spending in the healthcare system, and additional spending compared to 2019 and previous years on the country’s needed defense armor.

At the same time, it is designed to maintain fiscal balance and sustainable development goals in a year of international recession or even recession, and to support a wide range of reforms to improve the lives and well-being of all citizens.

It is obvious that the risks associated with macroeconomic forecasts for 2023, both nationally and globally, are increased and are primarily associated with geopolitical challenges, the development of the war in Ukraine, the conditions for supplying Europe with natural gas, energy and fuel prices, and European prices. monetary policy.

Growth: 5.6% in 2022 – 1.8% in 2023

However, the Greek economy has shown significant resilience thanks to the government’s fiscal measures. As a result, a growth rate of 5.6% is projected for 2022, almost double the European average, compared to 5.3% projected in the draft state budget for 2023, 4.5% projected in the state budget for 2022, and 3.1%, which was estimated in the Stability Program in April 2022, while the Harmonized Consumer Price Index is estimated to increase by 9.7% amid international inflationary pressures. The unemployment rate is expected to fall to 12.7%, compared to 13.9% projected in the Stability Program and 14.2% in the 2022 budget.

The positive development outcome was supported in 2022 by €4.8 billion of budgetary measures to address the energy crisis, €4.4 billion of measures to address the health crisis, and citizen-friendly reforms, as evidenced by a doubling of the minimum wages by 9.7% overall in 2022, a permanent and significant reduction in the unified tax on property ownership (ENFIA), an extension of the period for reducing insurance premiums and a special solidarity contribution, the abolition of tax on parental benefits – donations, a reduction in mobile phone fees, dual financial support for vulnerable social groups, an increase in housing student allowance, an increase in maternity benefits in the private sector, and important incentives to extend full-time employment.

Inflation 5% in 2023

For 2023, amid high forecast uncertainty, the Harmonized Consumer Price Index is expected to rise by 5% vs. 6.1% for the Eurozone and 7.0% on the European average, with growth expected at 1.8% from just before 0. 3% on average for the Eurozone and the member states of the European Union, according to the autumn forecasts of the European Commission.

The 2023 budget is now in its second year of being accompanied by a results budget, expanding the scope of agency program evaluation with additional measurement indicators (Key Performance Indicators) and cost-saving measures, and expanding the environmental impact assessment of agency policies. In addition, the functional classification, which was introduced last year in the first degree, has been expanded to the second degree, so that there is detailed information on the distribution of expenditures by sectors of the state’s activities.

Financial Goals

The 2023 budget is the first state budget in the last twelve years prepared outside the framework of memorandum supervision or enhanced supervision. Consequently, all budget figures are currently only presented using the common methodology of the European System of Accounts (ESA), and program estimates are now omitted.

This fact, however, demonstrates a national responsibility towards the sacrifices of citizens over the past twelve years, as well as towards the new generation, in order to maintain the financial balance of the country, relying on the same forces, even in times of adverse international circumstances. , for example, the one that passes.

Fiscal targets set in the Stability Agenda for the main general government outcome of a 2% GDP deficit for 2022 and a 1.1% GDP surplus for 2023 are being revised to a deficit of 1.6% GDP. for 2022 and a surplus of 0.7% of GDP for 2023. Thus, the balance of the budget for this period is maintained and the necessary resources are directed, prudently creating safe cash reserves, to meet the challenges in the new year.

The above result for 2023 includes total budgetary measures of €3.1 billion from national resources and €1.1 billion from co-financed resources announced at the Thessaloniki International Exhibition and an additional €1 billion to increase spending to combat rising inflation and the energy crisis.

In addition, resources of €8.3 billion are planned for 2023 from the Public Investment Program and €7 billion from the Recovery and Resilience Fund, of which €3.6 billion is from the grant section, which currently includes 440 projects and landmark investment of 13.7 billion euros.

“As mentioned, the uncertainty associated with wider geopolitical developments is the most important factor that makes it difficult to make safe forecasts around the world. In this context, the main weapon of the country’s economic defense is prudent financial management, directing available resources to mitigate the effects of the energy crisis and rising inflation in Greek society and the country’s industrial structure. At the same time, meeting realistic fiscal targets is a ticket to the markets, ensuring the sustainability of Greek debt and reaching investment grade to maintain the country’s positive economic outlook for the coming years. introductory speech by Minister of Finance Christos Staikouras.

Source: moneyreview.gr