His “tight corset”. Stability Pact returns after four years of suspension, perhaps to a larger “size” than the existing pact, but still with limits on spending limits for its member states. European Union.

Economic factors in Athens characterized Wednesday’s proposals as generally positive. commission for its reform, but at the same time noted that this marks the end of the era of subsidies due to coronovirus, energy crisis, etc., to which the country has become addicted in recent years and generally slows down any additional spending. “Perhaps even raising pensions will make it difficult,” they commented. According to the Commission’s proposals, the so-called “net costs”, i.e. costs minus the temporary nature of income, should not increase at a rate exceeding medium-term GDP. So the extraordinary income that temporarily creates fiscal spacedoes not justify increasing fixed costs such as pensions, according to new rules. Only a constant increase in income, ie. the new tax allows it.

OUR European Commission sent, according to “K”, for the Greek authorities to “model” the implementation of his proposed rules for Greece. It follows that the country must show a primary surplus of 2%-2.3% of GDP in the coming years to comply with the new rules, i.e. show a downward trend in debt. The required adjustment cannot be neglected despite a 2022 reversal that resulted in a primary surplus of 0.1% of GDP instead of a projected deficit of 1.6% of GDP. This equates to an amount – cost reduction or revenue increase – of more than 4 billion euros.

The stability program for 2023-2026, which the government will present tomorrow, Sunday, April 30, to the European Commission, is trying to follow these rules, which, however, are still under negotiation. He forecasts a primary surplus of 0.7% to 1% of GDP this year and in the region of 2% in the coming years. However, as clarified, this program has only a base scenario, which does not include election announcements, with the exception of the provision for the reform of civil servants’ salaries worth 500 million euros. However, the measures announced by Prime Minister Kyriakos Mitsotakis have a budgetary cost of 1.2 billion euros for 2023 (including 500 million euros for civil servants), which gradually increases to 2.2-2.3 billion euros in 2027 (total 8 billion euro for four years). years). To implement concrete measures, it is necessary to provide additional permanent fiscal space in the amount of 700 million euros to 1.8 billion euros. This means additional permanent measures, but, obviously, negotiations will take place later.

Economic analysts point out that the non-indexation of the tax scale saves a lot now, since inflation increases nominal incomes, moving taxpayers to higher categories and thus providing additional and permanent incomes.

Reducing debt requires cutting spending or increasing revenue by 4 billion euros.

In any case, the government’s finance staff indicates that spending on the government’s electoral program is being held back – certainly much more modest than SYRIZA’s €11bn a year – precisely to keep the country on a budgetary trajectory. discipline and return to investment level.

Central to the Commission’s proposal for new fiscal rules are 4-year national medium-term plans to be agreed on a bilateral basis with each Member State and will include a combination of fiscal adjustment measures, reforms and investment. The size of the adjustment should be such as to ensure a downward trend in debt for countries with debt above 100% of GDP and a deficit reduction of 0.5% of GDP per year for countries with deficits above the 3% GDP limit. . This will be the result of a debt sustainability analysis to be carried out by the Commission.

On the face of it, Greece appears to have no problem with these criteria, as its deficit is already below 3% of GDP (2.3% of GDP in 2022) and its debt has fallen by 23.3 percentage points in 2022. Her reservations concern:

– Attitudes towards investments that do not appear to be exempt, although it is hoped that special treatment will eventually apply, especially for digital and green investments. According to competent sources, it would be absurd if Greece were outside the borders, if it absorbed, for example, more resources than Recovery Fund.

– Whether the achievement of targets will be calculated on an annual basis or in total for four years, which will provide more flexibility.

However, the battle is now beginning, and both camps have already taken up their positions. German Finance Minister Christian Lindner has already warned that German consent should not be taken for granted and that guarantees are not enough. On the contrary, France believes that the Commission has become too strict to meet the demands of the Germans, and Italy is not satisfied, except for investment costs.