The challenges of YPOIK until the end of 2023

By Tasos Dasopoulos

The path of obstacles will be the course of the leadership of the Ministry of Finance at least until the middle of 2023, since in parallel with the confrontation of the external energy crisis, the economy must stabilize.

In the next period, the measure of indirect suspension of the adjustment clause for electricity tariffs will come into force, which is the big “bet” on the support measures of the year. YPOIK has already planned the allocation of 2 billion euros, for the relief of consumers, an amount that is doubtful whether it will be enough, given that Russia’s energy war in Europe, can send the price of gas and therefore and electricity, to new historical highs and in fact, in the immediate future.

At the same time, the leadership of YPOIK, having in mind the good course of revenues for the first five months, after fuel Pass 1, recently announced an increased subsidy on fuel for the period from July to September. Before implementing it, he announced a third in advance, for the last quarter of the year. It also does not rule out a new accuracy check, for the most financially vulnerable for the fall. All this, with the only firm being that tourism has made a good start and that the process of collecting direct and indirect taxes will give a surplus in relation to the budget targets that can be allocated for support measures.

Even if a second supplementary expenditure budget is needed due to support measures, it will be more or less “formal”. This is because the higher expenditures will be faced by higher revenues and consequently the target will not change, for a primary deficit of 2% of GDP at the end of the year.

The difficult equation of 2023

The financial staff will have a bigger challenge for next year. This is because in 2023, an additional budget space of at least 4.5 billion euros will have to be created. Next year ‘s budget is already planned to show a primary surplus of 1.1% of GDP, ie about 2 billion euros. In addition, it will have to cover the measures of 2.1 billion euros, which concern the abolition of the special solidarity contribution for the public and private sector, but also the reduction by 3% of the insurance contributions. It should also take into account an increase of € 450 million in pensions for retirees after 2016. Based on the Stability and Growth Plan we sent to Brussels, these benefits are based on a growth rate of 4.8% for next year, from the 3.1% expected for this year. EU and IMF forecast growth of 3.5% for this year, but 3.1% (the EU) and 2.6% of the IMF for 2023. The basic assumption is that the harmonized index of consumer prices will have an annual increase of 1.6 % for next year. Based on Athens’ estimates, many things will have to go well to achieve all these goals.

The election cycle

In the meantime, the economy will inevitably have to go through an unofficially open election cycle, with the entire opposition waiting for elections in the fall. The peculiarity of these elections is that they have a high probability of being double. This is because, conducting them with the system of simple analog, does not guarantee – except for the unexpected – a viable Government. Therefore, after the first elections we will have a second pre-election cycle for elections with enhanced proportional representation. Whatever the timing of the elections, the Ministry of Finance should continue to operate as if they do not exist and advance its agenda for the economy.