Spread and fiscal data rewrite the TIF package

Of Tasos Dasopoulos

The overperformance of the economy for the two months of July and August, as reflected in tax revenues, but also the GDP of the second quarter, which will be published next Wednesday by ELSTAT, will be the basis for the finalization of the measures announced by the Prime Minister, from TEF.

The release of budget execution data for July shows that revenue exceeded the budget target by €4.2 billion.

However, the 2.5 billion euros of this excess are due to early collection of income tax and ENFIA. Therefore, this amount cannot be considered a net excess, since some of the following months will have smaller than planned collections, since most of the assessed tax will have already been paid.

On the other hand, the 870 million euros from the one-time repayment of a refundable advance payment are extraordinary, but they can be added to the net revenue excess since they were not calculated when the budget was drawn up.

The same as the excess of 1 billion, from VAT revenues. And the result for the GDP of the second quarter is expected to give a better picture of the course of the economy for the whole of 2022.

In other words, there will be a clear sample from the first two quarters of the year, regarding how much more than 3.1% (which is still the official forecast for this year) the GDP will increase this year.

This second element will help the economic staff to make its projection for growth until the end of 2022 and also for 2023. This will help to decide the permanent interventions, which are planned for the next year.

Another constant for the new measures is that they cannot be financed by new borrowing and must not change the fiscal target, for 2022 and 2023. From the Ministry of Finance, they see the pressures that Greek bonds are once again facing in view of the of the ECB’s second interest rate hike and want to remain committed to the goal of returning to investment grade by 2023.

The meters that have locked

Two categories of measures are examined with these data. The extraordinary support measures until the end of the year and the first half of 2023, but also the permanent interventions that we will have in 2023.

Among the support measures, the main one is the continuation of subsidizing electricity tariffs for households and businesses. In reality, the cost of implementing the measure linked to natural gas will shape the rest of the support measures.

Its fiscal cost for the two months of June and July alone reached 1 billion euros. Last May, the measure predicted a fiscal cost of 800 million euros for the budget until the end of the year. It is therefore obvious that its continued implementation will require additional resources. In the category of emergency support measures is a new precision check with more than 200 euros of the first one given in April.

The next area of ​​intervention will be the heating allowance, which will be increased. In fact, as hinted yesterday by the competent minister of energy, Mr. K. Skrekas, special care will be taken for households that use natural gas as fuel

With these data, the scope for a third fuel subsidy (fuel pass 3) is significantly reduced.

The permanent interventions of 2023

Of the permanent interventions, two have been “locked in”: The abolition of the special solidarity levy for both the public and pensions with an additional cost of 450 million euros, as well as increases in pensions which do not have a personal difference with an additional cost of another 450-500 million euro.

In addition, the Ministry of Finance is looking for additional fiscal space of around 280 million euros, in order to extend for at least another six months, the low VAT rates in catering, tourism, transport, gyms, dance schools, theaters and cinemas that expire at the end of the year

A difficult issue is also the need to pay the retroactive payments for the cuts in supplementary pensions and gifts in 2012 that the CoE deemed unconstitutional. The implementation of the Supreme Court’s decision for all beneficiaries would have a cost of up to 2.5 billion euros, while the solution being considered, to pay only those who applied for their retroactive benefits, would have a cost of approximately 600 million euros.