2024-03-12 23:14:28
2024 may be the last year that the government will be able to make a decision on the granting of any emergency benefit, since from 2025, emergency aid measures will probably end. The Eurogroup has signaled a fiscal stance in the euro zone in 2025 that will be “slightly restrictive” and Economy Commissioner Paolo Gentiloni has predicted a “hot” summer of work for finance staff as a deadline of September 20 is expected to given to the member states for the presentation of their medium-term plans.
The planning envisages that after the announcement of the spring forecasts of May by the Commission, the Commission will determine the permissible upper limits of the increase of net primary expenses for the period 2025-2028.
With this compass, each member state and our country will proceed with the formulation of medium-term Fiscal Strategy programs and will not be able to provide benefits other than those included in the programs.
Exceptions and new data
NSRF funds and defense expenditures will be excluded from the increase in net primary expenditures. As the Finance Commissioner also stated, it is necessary to maintain the balance between the stabilization of public finances and the maintenance of the necessary fiscal space for the necessary investments in defense and in digital and green transition.
With the new data, even if the course of the Greek economy is going well and the economy’s revenues are more than what is foreseen in the state budget, it will not be able to “return” to the citizens the surplus of development, through some extraordinary provision such as those are given in recent years.
The reason is none other than the new measure, of net primary costs which leaves no room for additional costs in case of “fiscal space” that may arise.
Any extraordinary income such as for example those from the better course of tourism must be allocated to the improvement of the fiscal result, i.e. for a larger primary surplus.
As European actors report, the extra costs that would allow for the extraordinary benefits could only arise through the imposition of some tax, which the Greek government rejects as a scenario.
The new rules
The Commission will foresee a defined fiscal path for each country individually, taking into account debt sustainability, e.g. for Member States where public debt exceeds 60% of gross domestic product (GDP) or where the public deficit exceeds 3% of GDP.
The reference trajectory shows how Member States can ensure that by the end of a period of fiscal adjustment, public debt is on a reasonable downward trajectory or remains at prudent levels over the medium term.
The interim agreement provides for an optional dialogue between Member States and the Commission in advance.
Under the agreement, there are two safeguards that member states must comply with: the debt sustainability safeguard to reduce debt levels and the deficit sustainability safeguard to provide a margin of safety below the deficit ceiling at 3 % of GDP, in order to create fiscal buffers.
Based on the reference trajectory, Member States will integrate the fiscal adjustment path into their national medium-term fiscal structural plans.
The bar for the annual minimum reduction of the debt is lowered for our country to 1% of GDP. The deficit will continue to have an official limit of 3% of GDP.
However, in practice, the country should make an effort to reduce the deficit when it exceeds 1.5% of GDP, so that no country exceeds 3% of GDP.
In the new Stability Pact there is also the condition of excluding defense expenditure from the calculation of the deficit if this percentage exceeds the average percentage of EU expenditure. when the deficit and debt limits are exceeded, it will be taken into account whether this is due to high defense spending.
Source imerisia.gr