By Tasos Dasopoulos
Based on the recent autumn forecasts of the European Commission with different estimates mainly for the debt will be the final draft of the 2022 budget, which is expected to be submitted to Parliament at the end of the week.
The 2022 budget will mark the transition from the 2021 recovery after the coronavirus crisis to “clean” growth in 2022.
Although there is evidence of growth above the 7.1% forecast for 2021 by the European Commission, it is doubtful whether we will see it in the text of the budget, as in recent days the position for a “safe forecast given the new rise For 2022, the growth rate will probably be revised to 5.5% from the 4.5% forecast in the preliminary draft budget.
As for the baseline revenue and expenditure scenario, the framework remains the same. The increase in growth forecasts by 1% for both 2021 and 2022, maintains the forecast for an increase in tax revenues from year to year by 4.2 billion euros.
Expenditure will fall by about 12 billion euros due to the withdrawal of measures to support the economy.
However, for the next year, emergency measures of about 2 billion euros will continue to apply, which, while typically included in the emergency support measures, in essence mainly concern the suspension of the special solidarity contribution for the private sector, but also the reduction by 3% of insurance contributions.
The permanent measures that will be included in the budget, will be the reduced tax rate for companies from 24% to 22% at a cost of about 180 million euros and the reduction of the tax advance to 80% for legal entities and 55% for the self-employed.
The changes in ENFIA are probably transferred for 2022 and will be reflected in the next stability program that will be sent to Brussels in April.
The debt
As for the size of the debt critical for Greece, as competent sources of the Ministry of Foreign Affairs emphasize, the EU technocrats forecast a debt of 202.9% of GDP for this year and 197% for 2022, based on the now available data without management operations to be done at the end of the year.
They also did not calculate – since it has not been done yet – the reduction of the debt by 7.2 billion euros, which will be done automatically with the repayment of 1.8 billion to the IMF and 5.2 billion euros, for the bilateral loan of 52.3 billion euros that Greece received in the first memorandum.
Depending on whether the payment is made this year or at the beginning of 2022, its completion will result in the automatic equal reduction of the debt balance and the reduction of 4% of GDP.
Beyond that, however, the greater growth, as estimated by the Ministry of Finance, will result in debt falling as a percentage of GDP significantly below 200% for this year (maybe to 195% for this year from 205.6% in 2020 ) and below 190% of GDP for 2022, achieving with the above the reduction of 1/20 on an annual basis provided by the existing fiscal rules.
In the size of the budget but primary deficit, the calculations have not yet been completed, but they are not expected to differ much from the forecasts of the preliminary draft budget.
The public investment program
Of particular interest for 2022 is the part concerning the Public Investment Program. Public investment will reach 10.5 billion euros in 2022, including 3.2 billion euros of investments from the resources of the Recovery Fund, 6 billion euros from the NSRF and 1.2 billion euros from national resources.
Sources want the amount to be adjusted over time, if there is a faster absorption of Community funds.
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Source From: Capital
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