European label for cannula closure of support measures

By Tasos Dasopoulos

The total escape clause may continue to apply in 2022, but the scope for new support measures is limited to what is absolutely necessary, with the burden falling on debt and deficit reduction next year.

At the meeting of the Eurogroup finance ministers, the issue was discussed in the context of the Commission’s assessment of the Member States’ budgets. The joint statement said: “Highly indebted Member States should use the Recovery and Resilience Facility (RRF) to finance additional investment to support the recovery, while pursuing a prudent fiscal policy. All Member States should to maintain nationally funded investments as planned “.

Greece started in 2021 with a budget for support measures of 7.5 billion euros and just before the end of the year, the expenses for the support of the economy from the coronavirus and natural disasters have increased by almost 10 billion euros to 17.3 . No international organization inside or outside the EU has commented negatively on the extent of emergency pandemic spending as vaccines were delayed and the pandemic continued with the majority population unprotected until the end of the first quarter.

For the next year, however, things are changing as at the central level, in addition to supporting the recovery of the economies, it was decided that the budgetary deviations of the budgets created by the pandemic should be closed. The 2021 budget predicted that the budget deficit from 9.9% of GDP would be reduced at the end of the year to 6.7% of GDP. Today, after successive revisions, it is estimated that it will remain at 2020 levels, ie at 9.9%. Respectively, the primary deficit was expected to decrease from 7.2% in 2020 to 3.9% of GDP. Today it is estimated that it will reach 7.3% of GDP.

The only size that is expected to have a better course than the initial forecast, is that of debt. The reason is in the growth that from 4.8% of the GDP that was initially forecasted, is expected to exceed the 6.9% that has been set as a forecast in the budget. Thus, from 205.6% of GDP reached in 2020, it was expected that this year it will initially decrease to 199.6% of GDP. It is now estimated that it will fall to 197% of GDP and possibly lower.

Defense line from the Ministry of Education

Although it has not been particularly visible in practice, YPOIK has received the relevant “message” much earlier and seems to be moving accordingly. Recently, the Deputy Minister of Finance, Mr. Theodoros Skylakakis, admitted that in the budget targets for 2021, the deficit is not to exceed 9.9% of GDP.

In fact, recently came to light some payment delays in NSRF projects beyond those planned for this year. The problem was not cash (there are currently over 39 billion available) but fiscal. November had to be closed, to create a revenue surplus of about 480 million euros. Now that it is confirmed, the projects will be paid by the end of the year.

Regarding the wave of requests for extensions at the beginning of the repayment of the repayable advances and the installments of the regulation for the coronary debts, the ministry “cuts” the discussion in any extension that will reduce the revenues of 2022.

Based on the budget submitted to Parliament 15 days ago, the goals are to reduce the deficit from 9.9% of GDP this year to 4% of GDP in 2022, while the primary deficit from 7.3% of GDP to 1, 2% of GDP. General government debt is now expected to fall from 197.6% of GDP this year to 187.6% of GDP in 2022.

Informal commitment of YPOIK to the partners is that these forecasts can only be revised downwards.