PM Mitsotakis says budget bolsters middle class, spurs growth

This first draft budget presented by the government of Prime Minister Kyriakos Mitsotakis foresees the economy expanding by 2.8 percent on an annual basis, up from a projected 2 percent in 2019, and also includes tax breaks of almost 1.2 billion euros.

The 2020 budget seeks to relieve pressure on the middle class, boost small businesses and the real estate sector, and put the focus on green growth, Mitsotakis told lawmakers in Parliament ahead of a vote on the new legislation on Wednesday.

“I had made a commitment to the Greek people on three main priorities. I will reduce taxes, I will create many and well-paid jobs and I will restore a sense of security,” the conservative prime minister told lawmakers.

To this end, Mitsotakis announced the gradual reduction of the so-called solidarity tax as of next year, lower corporate and property transfer taxes and an additional reduction of the ENFIA property tax of 8 percent on top of the current target of 30 percent, though this will be calculated on the basis of new real estate values.

He also said that state coffers will be boosted with the injection of 5.1 billion euros by May 2022 from the return of profits from Greek government bonds.

On the subject of green growth, Mitsotakis announced measures bolstering investments in energy upgrades on property, as well as plans to shut down Greece’s lignite powered electricity plants by 2028 and to increase the ratio of renewables to 60 percent by 2030.

The Finance Ministry foresees the primary budget surplus of just over the agreed target of 3.5 percent of the gross domestic product, at 3.58 percent according to the calculation method used by the country’s creditors.

Domestic demand is set to accelerate its growth rate to 2.9 percent year-on-year in 2020 from 1.8 percent in 2019, and employment is projected to expand 1.8 percent from 2019. Inflation will only marginally grow from 0.6 percent this year to 0.7 percent in 2020.

Exports are seen growing 5.1 percent, while the increase in domestic demand is set to take imports 5.2 percent higher next year.

The budget also projects the increase in the ratio of investments to the gross domestic product from 11.9 percent this year to 13.1 percent in 2020.