Coordinated with the autumn forecasts of the European Commission, which will reduce economic growth and increase inflation next year, will be the budget, which the government submits today to parliament. It will be a budget returning to primary surpluses, but at the same time it will not lack the tools to finance new interventions, which may be caused by financial difficulties, as well as pre-election needs.

The budget will not include new measures beyond those already announced (the abolition of the solidarity contribution to civil servants and pensioners, a permanent reduction in social insurance contributions, and an increase in pensions by about 7.5%). However, it will include a €1 billion reserve, which is intended primarily to support electricity tariffs, but could also be used for other purposes if the price of electricity is held, as has been the case so far. In addition, the financial staff is looking forward to additional revenues from taxation of refineries, which will be implemented after the approval of the relevant European Union regulation at the end of this year. It is noted that the taxation of producer surplus has generated 2.4 billion euros this year, while Deputy Finance Minister Theodoros Skilakakis said in an interview last week that another 377 million euros are expected this year. In addition, in the fuel sector, the just passed law on tax surpluses and suppliers other than manufacturers will help generate revenue this year and in 2023 revenues.

The government is not ignoring the fact that households are facing a tough winter. They speak of problems not only with energy accuracy, but also with high grocery prices in supermarkets and rising interest rates that are weighing down on any loans they may have. Obviously, new support measures will be launched in connection with next year’s elections, and, as follows from the statements of finance officers, they will concern direct support for households, and not tax cuts.

However, Brussels is reportedly concerned that a sharp drop in GDP from about 6% this year to about 1% in 2023 will lead to higher wages for civil servants as well as other vulnerable households, and that 2023 resources may not be enough. to meet such needs, thus compromising the purpose of primary surplus. In fact, relevant sources point out that the government was very supportive in 2022 (2.3% of GDP was allocated to energy support, one of the highest percentages in the EU), while it would be appropriate to take advantage of unexpectedly high growth rates. 2022 to create a cushion for the difficult 2023 ahead.

The 2023 budget does not include any new support measures other than those announced, but it does include a €1 billion airbag.

In that sense, and with the 2023 election in mind, the government seems to support the idea of ​​keeping some sort of “ammunition” for next year mostly, with a primary deficit this year slightly below the draft plan (about 1.5%-1 .7% of GDP). In doing so, he hopes to win the favor of the markets, from whom he expects good ratings in 2023 and possibly investment grade, although this is likely to happen – if it happens – after the election. This, however, does not rule out some last-minute interventions in the near future, before the end of the year, if circumstances so require and the finances of the state allow. Despite the difficulties, Finance Minister Christos Staikouras insists the budget will confirm that the Greek economy is holding up and performing better than the European one, as the Commission’s autumn forecasts showed.

Indeed, according to reports, GDP growth this year will be around 6% (from 5.3% of the project in October), but in 2023 it will be 1-2% (compared to 2.1% of the project). However, growth will be higher than the EU average of 0.3%. The government believes that investments will be a key development factor next year, as the projects of the Recovery Fund mature, of which 5.6 billion euros are expected, in addition to 8.3 billion euros of investments from the State Investment Program.

Inflation is projected to average around 10% (against 8.8% in the project) on average this year and above 5% in 2023 (against 3% in the project).

This year’s strong growth, beyond all expectations, keeps the primary deficit below the 1.7% of GDP that was projected in the budget. Since, in fact, there are still 3.5 months left (the fiscal year ends at the end of February), it is possible that the results will turn out to be even better than what the budget will write tomorrow.

For 2023, the primary surplus target certainly remains stable and may strengthen slightly from the 0.7% GDP of the draft plan, moving closer to the Commission’s forecast of 1.1% GDP.