Evidence of fiscal prudence

Four days before this Friday’s assessment of the Greek economy by Standard & Poor’s, the government presented new signs of fiscal prudence, as the Draft Budgetary Plan it submitted to Brussels envisages an increase in net primary expenditure of only 0.4% of GDP, while the European Commission’s relevant guideline leaves room for an increase of up to 2.6%.

According to economic staff sources, the containment of the 2024 increase is due to the large increase in spending in the second half of this year (due to the floods and elections, two supplementary budgets of 1.3 billion euros were tabled). However, it does not cease to be a sample of prudent intentions in the exercise of economic policy.

Net primary expenditure is general government expenditure, minus interest, revenues from the European Union and any new permanent measures on the revenue side that the government will take. It is the new standard proposed by the Commission for monitoring fiscal discipline, in the context of its proposals under discussion for the new Stability Pact.

“Following a sustained, prudent fiscal policy,” the DBP text says, “general government consumption in 2024 will decline by 1.3% compared to 2023 (when it was 3.5% higher than the pre-pandemic level).”

The DBP confirms the 2023 and 2024 fiscal figures as reflected in the 2024 draft budget. “In this way, it is also confirmed to the international community that the target of a primary surplus of 1.1% of GDP in 2023 and 2.1% of GDP in 2024 is achievable, while the general government debt is expected to be scaled down from 171.4% of GDP in 2022 to 159.3% in 2023 and to 152.2% in 2024,” said the announcement by the Finance Ministry.

Meanwhile, the execution of the budget also points to fiscal prudence, as the primary result in January-September, according to Monday’s data, was a surplus of €5.984 billion, against the target for a primary surplus of €2.436 billion and a primary surplus of €52 million in the same period in 2022.