Working hard on the budget parameters
Next year must see a major fiscal adjustment, as 2022’s 2% primary deficit must become a primary surplus of 1%. In practice, this means 6 billion euros.
That adjustment should also accommodate the cost of power subsidies that must drop from the current €500 million per month, the cost of abolishing the solidarity levy for all (i.e. €450 million), and the pension increase.
The Finance Ministry has run the 6.5% scenario, effectively predicting a sum of growth and inflation of the order of 13% (5% growth and 8% inflation). Two out of three pensioners will see an increase, whose gross fiscal cost is estimated at around €50-55 million per month or around €600-650 million in total. Of this amount, a percentage of the order of 30% will return to the state through tax revenues.
This week the ministry is finalizing the assumptions on which the implementation of this year’s budget will be based, as well as the preparation of the 2023 budget. They will determine the fiscal space to finance the support measures for 2022 and 2023. The assumptions include that tax revenues will continue to outperform, growth will be over 5% instead of the 3.1% forecast, and oil rates will not rebound.
