The budget figures under review

By Tasos Dasopoulos

Under review, before the final vote is the final draft budget in Parliament, which began to be discussed today in the plenary of Parliament and is expected to be voted on Saturday.

The data for the third quarter of the year, published last week, recorded a growth of 13.4% for the quarter. Together with the revision for the first and second quarter (-1.9% and 16.6% respectively) carried out by ELSTAT, they confirm that the economy will grow at a rate of 7%, marginally higher than the budget even with zero growth in the last quarter of the year.

However, the positive sign for growth for the period October – December is considered a given, as during this period the market will operate with minimal restrictions for the unvaccinated, while last year in the same period the economy was in lockdown, recording a decrease in GDP by 7 , 1%.

By itself, the low base for GDP in 2020 raises the bar for the last quarter of 2021. The extension of the tourist season that we had this year for the months of October and (for tourist destinations) in November.

As a precursor to growth, tax revenues exceeded the budget target by 136m euros in October and about 500m euros in November.

All this leads to the conclusion that the growth for this year can reach 8% and may be higher, as predicted almost from the middle of the year by many investment banks, causing – then – a surprise.

The immediate consequence will be that in 2021 it will close in terms of tax revenues by exceeding the already revised upward target of the budget, by approximately 1.5 billion euros.

In terms of expenditure, things are a bit more complicated as, due to the support measures, they can not be squeezed from the 70.85 billion euros recorded in the budget.

However, due to the large increase in GDP, if spending does not increase by the end of the year, we will have a small reduction of both the budget deficit from the target of 9.9% of GDP and the primary deficit from 7.3 % of GDP expected to reach this year.

The biggest gainer is expected to be debt, which is expected to de-escalate compared to last year by about 10% of GDP from 206.3% of GDP at the end of 2020, instead of the 197.1% projected in the budget in 196.3% -196.5% of GDP.

The changes for 2022

The obvious revision for the 2022 forecast is that, by changing the GDP for 2021, the GDP growth for next year will be less than 4.5% included in the 2022 budget. This is despite the fact that the European Commission forecasts in its autumn forecasts GDP growth of 5.3% for Greece in 2022.

In terms of tax revenues, the increase from year to year is finally expected to be reduced to about 2 billion euros, instead of 3.5 billion euros provided by the budget. Expenditures will remain the same at 65.6 billion euros, reduced by 5.2 billion euros compared to 70.8 billion this year, with the decrease being mainly due to the gradual withdrawal of measures to support the economy.

The goal that will change for 2022 will be that of debt. If the reduction by 7.5% of GDP from year to year is achieved, the debt from 196.3% of GDP that will finally reach 2021, will be reduced to 188.8% of GDP.