Greece’s financial staff and the European Commission are about to conclude talks on the new 4-year Fiscal-Structural Plan ahead of the submission of the Fiscal Structural Plan in Brussels early October.
The execution of this year’s budget plays a crucial role, with Finance Minister Kostis Hatzidakis revealing in an interview with Bloomberg news agency that, based on the latest estimates, the primary surplus will reach 2.4% of GDP this year against an initial forecast of 2.1% of GDP. This gives the government room to increase spending.
The downward trajectory of the debt is expected to be reflected in the new 4-year Fiscal Structural Plan. According to Hatzidakis, Greece intends to reduce public debt by approximately 20 percentage points within four years. The main goal is to approach 130% of GDP by the end of 2028.
Cash buffer
The early repayment of two more installments of the loan of the first memorandum, totaling 8 billion euros, by the end of the year is also positive news.
For the repayment, Greece will use part of the cash buffer amounting to 15.7 billion euros.
The growth rate of net primary costs, as the Greek side has already requested that it be higher than the 3% set in the summer by the Commission, is at the forefront. What has been requested is the increase in spending to be at the level of 3.5%, a decision which seems almost a foregone conclusion if one judges that the Prime Minister announced in Thessaloniki a series of interventions for 2025. However, the average growth rate will amount to 3% until the end of 2028.
“Thanks to a better-than-expected budget performance, we can have a larger increase in spending compared to initial estimates,” Hatzidakis noted.
Based on the satisfactory performance of the Recovery Fund, the possibility remains open that the growth rate this year will fluctuate at slightly lower levels compared to the initial forecast of 2.5% and will come closer to the Commission’s estimates, i.e. 2.2%.
What do we expect in the next 20 days?
There is a bunch of crucial economic news over the next 20 days:
At the beginning of next week, the placement of the National Bank will start, i.e. for the allocation of a percentage held by the Hellenic Financial Stability Fund (HFSF). According to sources, the percentage that will be allocated ranges between 10%-12% of a total of 18.39% held by the HFSF.
“An additional sale of shares from those held by the HFSF is likely to take place in October – provided, of course, that market conditions are favorable,” Hatzidakis said.
On Monday, October 7, the draft budget for 2025 will be submitted to Parliament.
During the second week of October, the new 4-year Financial-Structural Plan will be submitted to the Commission, which will have been drawn up based on the new financial rules.
Between October 9 and October 11, the heads of the institutions will be in Athens to prepare the Post-Program Surveillance Report. Among other things, focus is expected to be placed on the reduction of overdue debts of the State to private individuals after the latest July data which showed an increase to 3.2 billion euros from 2.8 billion euros at the end of 2023.
