The optimistic forecasts for a 2023 primary surplus higher than the target were eventually confirmed. According to the data announced by the Hellenic Statistical Authority (ELSTAT) and validated by Eurostat, 2023 closed with a primary surplus close to 1.9% of GDP, more precisely at 1.86% or 4.09 billion euros, versus a forecast for a primary surplus of 1.15% of GDP based on the 2024 budget.
Debt
Greece may remain the country with the highest debt, but it records the fastest decrease of 10.8% in a year. More specifically, from 172.7% of GDP in 2022, it fell to 161.9% of GDP in 2023. In absolute numbers, in 2023 the public debt decreased to 356.69 billion euros compared to 356.79 billion euros in 2022.
However, the government will not be able to adopt new support measures as based on the new fiscal rules (to be ratified by the European Parliament on Tuesday) if a country performs better than forecasts, the excess will be “kept” as a “cushion”. After all, the support margins are determined by the new primary expenditure rule.
During the summer, negotiations will begin between Greece and the other member states with the Commission in order to determine the limit of primary expenses. Based on this, the government will prepare the new 4-year Fiscal Adjustment Plan that will be submitted to Brussels at the beginning of autumn.
4 benefits
“This positive result proves the dynamics of the Greek economy, but also the gradual benefits from the reduction of tax evasion. In the period January-February 2024, 397 million euros out of the 647 million euros that exceeded the targets came from the payment of corporate income tax,” the Ministry of National Economy and Finance pointed out in a statement and added that the positive performance was reflected in 4 areas:
First, the faster reduction of the public debt. Based on the above result, the debt to GDP ratio decreased from 172.7% in 2022 to 161.9% in 2023.
Second, a better starting point for achieving 2024 fiscal targets, despite the international turmoil and the slowdown in international and European growth rates.
Thirdly, additional flexibility margins regarding the country’s 4-year fiscal planning due to debt containment.
Fourth, the performance sends a strong signal to the international markets that the Greek economy is strengthening and growing beyond the targets, despite the difficulties and emergency situations that the country has faced (natural disasters, international crises, national elections, etc.) over the last year.
By the end of the month, the financial staff is expected to proceed with the filing of the Stability Program, according to the old fiscal rules. The target set for this year and next year is for the primary surplus to reach 2.1% of GDP.
The revenues that support the achievement of the 2024 target are mainly revenues from VAT, excise taxes, income tax, insurance contributions and privatizations.
