For economic performance but also for them new tax rules which will come into effect from now on, with a focus on cost reduction, he said the Minister of Economy and National Finance, Kostis Hatzidakis.
Speaking with AMPhighlighted that the performance of the economy “allow our faster convergence with the European average, to cover more quickly the ground lost due to the crisis we have experienced in the last decade, but also to reduce public debt more quickly. This policy of ours is bearing fruit and will continue, as it serves to maintain fiscal responsibility and strengthen social cohesion.”
A significant amount of positive performance
According to the minister, “the formulation of the new fiscal rules was the result of a long, complex and difficult negotiation, in which the Greek government participated actively and substantially. The policy we have followed in recent years serves it combining fiscal discipline with social sensitivity. And this policy has already produced a significant number of positive results. Performances such as five times the growth rate compared to the European average, a reduction in unemployment, stronger wages, a large increase in exports and the attraction of more investment.
And he adds that “performances like these allow us our faster convergence with the European average, for what cover more quickly the lost ground of the crisis we have been experiencing in the last decade, but also to reduce public debt more quickly. This policy of ours is bearing fruit and will continue, as it serves to maintain fiscal responsibility and strengthen social cohesion.”
According to information from economic agents, in addition to the 880 million euros for additional measures to reinforce citizens’ income and additional reduction of charges for 2025, as foreseen in the April Stability Program, it is possible, due to the positive performance in the budget , create additional fiscal space of approximately 350 million euros by the end of the year.
In this case, the amount should be used primarily to further strengthen social cohesion.
It should be noted that additional measures to increase citizens’ incomes and further reduce burdens for 2025, amounting to 880 million euros, concern:
-The reduction of insurance contributions by 0.5%, at a cost of 225 million euros.
-Reduce, essentially abolish, professionals’ professional fees, worth 120 million euros.
-About the definitive return of the Special Consumption Tax (SCT) to farmers, worth 100 million euros.
-Increasing the student accommodation subsidy (15 million euros).
-Increasing pensions, which based on the well-known mathematical formula, is estimated at around 400 million euros.
– Suspension of VAT on construction, worth 20 million euros.
With regard to the new fiscal rules, as highlighted by officials from the Ministry of Finance, the net primary expenditure targets sent by the European Commission to Greece based on the new fiscal framework, foresee a maximum allowed an annual increase in net primary costs in the region of 3% (on average) per year for the period 2025-2028. Note that the corresponding target for 2024 was 2.6%.
The goals
The objectives of achieving net primary costs will be finalized after a technical dialogue with the European Commission and will be integrated into the Medium-Term Fiscal-Structural Program that will be presented by Greece to the Commission in the autumn.
Overall, commenting on the specific factors, the objectives mentioned above are compatible with fiscal policy planning for the coming years and reflect the significant progress that Greece has achieved in all the variables that determine the sustainability of public debt:
It is characteristic that in the period following the onset of the pandemic (i.e. the three-year period 2021-2023) the debt-to-GDP ratio in Greece has seen a decline, which is a record in the history of the euro area.
At the same time, the country returned to a healthy primary surplusit recovered investment grade, thus significantly reducing the cost of public debt, and has a growth rate significantly higher than the European average.