With a “plus” as was his sign financial balance 2022, the next government will start its economic policy. Though small – primary surplus last year’s 0.1% of GDP, down from a primary deficit of 1.6% of GDP projected a few months ago, gives a boost to fiscal targets this year and beyond, which will become increasingly difficult.

The Ministry of Finance these days is forming the final figures that will contain the Stability Program for 2023-2026, which the government will submit on April 30 for consideration European Commission. Although the program will not make direct reference to primary results, its other forecasts suggest that the primary surplus will move to the budgeted level of 0.7% of GDP or even slightly higher this year. A primary surplus of 2% of GDP is projected for 2024, and slightly higher for the next two years, at 2.2-2.3% of GDP.

These indicators are necessary to ensure debt sustainability, which will be the main criterion commission in medium-term agreements it will conclude with member states under the revised Stability Pact. If her proposal doesn’t pass, if German positions prevail or there is no agreement and we go back to the old Stability Pact (which is unlikely), then things will probably get worse for Greece. In addition, for 2024, when the new Pact has not had time to materialize, the Commission will issue recommendations next month that will no doubt move in the direction of fiscal tightening.

Thus, the good financial results for 2022 announced by ELSTAT and Eurostat last Friday, under the so-called excessive deficit procedure, are a welcome gift for the next government. The distance it would have to travel to adjust from a surplus of 0.1% of GDP in 2022 to 0.7-0.9% this year and 2% in 2024 is clearly less than the distance it would have to be overcome if there were a primary deficit of 1.6% of GDP in 2022, as projected in the 2023 budget a few months ago.

Who made this gift to the government? According to financial analysts, as well as IMF, growth, as well as inflation, contributed almost equally to increasing nominal tax revenues and nominal GDP, and thus reducing the deficit and debt as a percentage of GDP. Also positive for 2022 were the results of the latest adjustments made by Eurostat.

In 2022, Greece recorded the largest reduction in debt as a percentage of GDP.

The Chief State Accountant’s calculations are as follows: an improvement in the projected deficit of 1.6% of GDP to a final surplus of 0.1% is 1.7% of GDP. That is about 3.5 billion euros. Of this amount, EUR 770 million is the last ANFA and SMP contribution paid in 2023, but Eurostat has finally decided to register it in 2022. Another 380 million euros are expenses that were calculated for the participation of the state. in an increase in the authorized capital of Bank of Attica and was registered in 2022, but Eurostat postponed it to 2023. Thus, 1.250 billion are adjustments due to Eurostat.

In addition, about 600 million euros more is estimated by the Ministry of Finance as an overfulfillment of tax revenues for the first two months of this year, which correspond to 2022, due to higher growth (5.9% instead of the forecast of 5.6%). ) and inflation. Mainly, as they point out, it is corporate income tax. But about the same amount is due to underperformance by some ministries, the sources say.

However, the 2022 exemption from Eurostat’s fiscal adjustments, 1.250 billion euros, is a burden for 2023, the Ministry of Finance points out. In addition, in 2023 it was saddled with approximately 600 million euros due to recent electoral benefits (an extension of the VAT exemption, a gift to pensioners who did not receive a raise, and an 8% increase in disability benefits). So while this year is starting with strong momentum from 2023, due to fiscal consolidation and a high rate development and while the government has revised its growth target this year to 2.3% from 1.8%, this year’s primary surplus target of 0.7% of GDP will not be significantly revised upwards.

In any case, the return to the primary surplus a year earlier is a testament to the government’s commitment to the goal of fiscal prudence, and the ruling party has no intention of wasting it ahead of the election. Instead, he will seek to capitalize on it. According to its officials, the economic program of the National, which will be announced next week, will be very modest in terms of spending, with an emphasis on reliability.

In 2022, Greece recorded the biggest reduction in debt as a percentage of GDP, by 23.3 percentage points, to 171.3% of GDP, remaining by far the highest in the EU, according to ELSTAT fiscal data.