Three major milestones for Greece by the end of the year

By Tasos Dasopoulos

The guidelines for the remaining half of 2022 and 2023, which were “renewed” by the Eurogroup yesterday, were clear for highly indebted countries like Greece: support households in moderation against precision, reduce deficits and debt, speed up implementation of the Recovery Fund.

In terms of support to households and businesses, as during the pandemic, Greece was among the countries that provided the most support against punctuality. The measures – regardless of the funding source – from the end of 2021 until now, have reached 8.5 billion euros. Of these, approximately 3.5 billion euros is the budget contribution. The fact that there is no specific reference to Greece is due to the fact that Greece is financing the support measures from the revenue surplus provided mainly by indirect taxes and, since the beginning of April, tourism, for which there are now reasonable expectations that it will exceed the turnover- a record of 18.5 billion euros in 2019. The deficit will be reduced in 2022 by 3% of GDP and the debt by 13% of GDP.

The Eurogroup also recommends measures that target the most economically vulnerable and are not permanent. This helps the Ministry of Finance to fend off the opposition’s permanent request to reduce the Excise Tax on fuel. However, it should be managed very carefully in the measure of the suspension of the readjustment clause, which due to the high prices of natural gas and consequently electricity, may require more than the 2 billion euros that were calculated. The specific measure is extraordinary, but it is applied horizontally. It is therefore close to the commission’s “red line”.

The Recovery Fund

The Eurogroup’s second mandate for highly indebted countries is the rapid implementation of investments and reforms in national recovery and resilience programs. The aim is to offset the loss in GDP caused by the energy crisis with public investment. In a period of 8 months, since November when the operational agreement with the EU was signed on the timetable of milestones, Greece has activated 230 investments and reforms, with a total budget of 10.3 billion euros, while it has put 55 investments on the starting line , with a budget of 2.6 billion euros.

It received the first regular tranche of €3.6 billion in April and has completed the 25 milestones of the second tranche of €19.7 billion for which it is expected to make a formal request in September. Until the end of the year, it will have to complete another 40 milestones, with which it will be able to claim the third tranche of 3.5 billion euros. With these performances, Greece is in the top three countries with the best performance in the implementation of its national program for the Greece 2.0 Recovery and Resilience Fund.

The last tranche of bond earnings

A special chapter for Greece, which of course was not mentioned yesterday, is the closing of the pending cases of enhanced supervision. Typically the scheme will be completed in around 40 days, but it is actually expected to end in November. Greece has a further tranche of around €750 million pending from bond earnings, which will be given in Greece’s first assessment based on the European Semester and will be disbursed in November.

Before that, however, Greece should have fulfilled its commitments to zero out of overdue public debts, pension arrears, pending cases of the old Katseli law, frozen auctions of the validation of forest maps and smaller changes in health and justice .