Greece’s fiscal targets for the period up to 2028 will be ‘locked’ at the end of the month, while it seems that there is no scope for new negotiations to readjust the limits of public expenditure increases until 2028.
Based on the Medium-term Fiscal Structural Program, Greece commits to keeping the growth rate of its net expenditures close to 3% as well as that it will grow at a rate of 1.5%-2.2% for the coming years. Moreover, inflation will have to be maintained close to 2% and the debt-to-GDP ratio will be reduced to 133.4% by the end of 2028.
As can be seen, the room for maneuver, both for 2025 and for the following years, is now extremely limited, as the targets are set to ensure the continuous de-escalation of the debt-to-GDP ratio, which is also the central objective for all countries with a debt-to-GDP ratio above 90%. Any discrepancy in the change in net costs should be “corrected.”
Therefore:
- If the deviation is downward (i.e. the rate of change of net expenditure is less than the target), a safety cushion is created, and the difference can be transferred to the next budget.
- If the deviation is upwards (that is, the rate of change of net costs is higher than the target), “equivalent measures” are activated (a concept known to the Greeks since the time of the memoranda).
