Less leeway for handouts this winter
This coming winter, the government will have less leeway to intervene to fix problems such as soaring prices because of more rigid budget surplus obligations.
The previous winter, fiscal policy was based on two budgets – for 2022 and 2023 – whose implementation contained a so-called escape clause. This provided the Ministry of Finance with more flexibility regarding the size of the primary surplus, that is, excluding debt servicing. This winter will involve two budgets, for 2023 and 2024, which, cumulatively, must produce primary surpluses of at least €7 billion (about €2.5 billion in the 2023 budget and at €4.5 billion in the 2024 one), which obviously, limits the spending margin. The 2022 budget, by contrast, only had to balance its primary spending.
It follows that support measures cannot match the scale of the recent past. And the obligation to produce a certain primary budget surplus level cannot be tinkered with, because that would affect the country’s chances of achieving the much-wanted investment grade for Greek debt. Already, a €700 million supplementary budget has been submitted to fund the Market Pass – financial aid to cover household costs for the third quarter of the year (July-September) – and the public sector’s rising operating costs.
The Finance Ministry is hunting for the extra revenue that will allow Prime Minister Kyriakos Mitsotakis to announce the extension of the Market Pass for the fourth quarter (October-December), funding for the heating subsidy and an emergency income support for pensioners that will see no pay rise on January 1, 2024 due to prior legislation provisions. Mitsotakis is expected to announce these measures in its keynote speech at the Thessaloniki International Fair on September 9.
