Greek government tables 2024 budget plan to Parliament

The Greek economy is projected to grow by 2.9% next year from 2.4% in 2023 according to the final budget plan for 2024 tabled in Parliament by National Economy and Finance Minister Kostis Hatzidakis. The budget plan will be discussed in the Parliamentary Economic Affairs Committee before a parliamentary plenary debate begins on December 13th, while a vote is scheduled for December 17.

The budget plan envisages that the inflation rate will fall to 2.6% on average in 2024 from 3.9%, the unemployment rate will drop to 10.6% from 11.2%, private consumption will rise by 1.3% (2.9% this year) and public consumption will fall by 1.6% (0.4% this year). Private investments will rise by 15.1% in 2024 from 7.1% in 2023, exports of goods and services are projected to rise by 5.6% (2.7% this year) and imports of goods and services are expected to rise by 4.6% (2.2% in 2023).

The strong resilience of the Greek economy, as reflected in 2022 and 2023, is projected to be confirmed in 2024, with the economy growing at a faster rate compared with the European average growth rate. This strong dynamism will lead to positive performance despite the economic uncertainty prevailing on a European and global level. A foundation for the positive outlook of the Greek economy will be adherence to prudent fiscal policy, which will lead to a further upgrade of the country’s credit rating. The economic performance of structural reforms, currently under way, will contribute to the strengthening of fiscal stability and a further reduction of public debt.

Real GDP is projected to reach 233.8 billion euros in 2024 (or more than 200 billion euros in fixed prices) to the highest level since 2010. The Greek economy is expected to surpass the EU average growth rate by 1.7 percentage points, with the domestic labour market expanding to the highest level in 14 years.

The Greek budget envisages measures to support lower incomes and to boost economic activities by focusing on combating tax evasion and reducing imbalances. These measures include an increase in public servants’ wages, new raises in pensions, raising the tax-free allowance by 1,000 euros for families with children, raising the minimum guaranteed income by 8%, expanding maternity benefits, continuing the youth pass and other benefits.

Short-term risks for the Greek economy in 2023 and 2024 included any further slowdown of the European and global economy, adverse international geopolitical developments, persisting high inflation, a renewed energy crisis, extreme climate phenomena, continuation of a strict monetary policy by ECB and slow absorption of Recovery and Resilience Funds.

The Greek government is introducing multi-level interventions to combat tax evasion in the country. These include: completion of the linking of cash machines with POS, limiting the use of cash on real estate transactions and raising fines for purchases worth more than 500 euros in cash. Introducing a mandatory e-transaction of account files to myData, digitalisation of tax inspections, offering a financial bonus to citizens helping in tax inspections, more severe fines for smuggling and reforming the taxation of individual companies.

The 2024 budget focuses on the introduction of significant reforms that will lead to a further growth of the Greek economy, safeguarding achievement of fiscal goals. These reforms focus on raising incomes, supporting vulnerable social groups, restricting tax evasion. It also includes permanent measures to fortify the country against the climate crisis.

The budget envisages a primary surplus of 4.991 billion euros or 2.1% of GDP in 2024 and a cash revenue from privatisation totaling 5.771 billion euros (4.653 billion from concession contracts, 23 million from selling fixed assets and 1.095 billion from selling equity stakes).

The government projects 20,000 new hirings in 2024 and 7,842 retirements in the public sector. The Public Investment Programme is projected to spend 12.167 billion euros in 2024, or 5.2% of GDP, of which 6.5 billion euros on co-funded projects, 2.050 billion on projects exclusively funded with national funds and 3.617 for projects funded by RRF.

The general government debt is expected to fall to 357 billion euros or 160.3% of GDP by the end of 2023, from 356.6 billion or 172.6% in 2022 and its projected to reach 356 billion euros or 152.3% of GDP in 2024.

Fiscal projections are subject to risks and uncertainties, related with geopolitical developments in Ukraine and the Middle East. These developments could have a significant impact on international economic activity, especially through energy prices. Other factors of uncertainty are a strict monetary policy followed by central banks with the aim to tame inflationary pressures. The budget plan includes an adverse scenario of a 1% decline in the nominal growth rate of GDP compared with the basic scenario. This could lead the GDP to 231.5 billion euros and to a deterioration of the fiscal outcome by 0.5% of GDP.