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But the budget forecasts also reflect effects of the health crisis on public revenue and public spending.
According to the budget execution data, the primary result of the General Government By 2020, it is estimated that in terms of enhanced supervision it will amount to a deficit of 11,760 million euros or 7.22% of GDP. In terms of the ESA, it is estimated that it will be in a deficit of 11,140 million euros or 6.8% of GDP. This difference is mainly due to the reduction in tax revenues and insurance contributions by 2.3 billion euros, mainly due to the lower forecast of real GDP growth, but also due to higher public spending to face the pandemic.
By 2021, the primary outcome of the General Government in terms of reinforced supervision, a deficit of 6,670 million euros or 3.88% of GDP is expected. Respectively, on a budget basis, the primary result of the General Government is projected to be a deficit of 6,590 million euros or 3.8% of GDP.
The planned fiscal policy stance continues to show the government’s priority for gradual fiscal stabilization. The draft budget anticipates a significant increase in revenue, mainly due to projected economic growth and employment growth.
Central Administration debt is estimated at 370.8 billion euros or 227.8% as a percentage of GDP at the end of 2020, compared to 356.15 billion euros or 194.1% as a percentage of GDP in 2019. In 2021 the amount of Central Administration debt is projected to reach 376.2 billion euros or 218.8 % as a percentage of GDP, showing a 9% decrease compared to 2020. The debt of the Public Administrations is estimated at 340,000 million euros or 208.9% of GDP at the end of 2020, compared to 331,070 million euros or 180.5% as a percentage of GDP in 2019. In 2021, the General Government debt is projected at 343.2 billion euros or 199.6% as a percentage of GDP, showing a decrease in 9, 3 percentage points of GDP compared to 2020.
The cash financing needs of the 2021 State Budgets are projected at 17,850 million euros, while the net indebtedness of the State Budgets will reach 16,360 million euros.
Income and expenses
Specifically, the tax revenue from State budget they are expected to amount to 47,830 million euros, increased by 3,571 million euros compared to 2020 (+ 8.1%). This increase comes mainly from the increase in VAT revenue (+2,460 million euros), special taxes (+139 million euros), personal income taxes (+163 million euros) and legal entities. (+830 million euros). The progressive amortization of part of the tax and insurance liabilities suspended in 2020 will provide income of 224 million euros.
Also provided an increase of 709 million euros (+ 3.5%) of OKA’s income from insurance contributions, due to the increase in employment. We believe that some reservations may be raised regarding the scope of the above increases.
the set of expectations income privatizations in 2021 are expected at € 1.7 billion, compared to just € 54 million this year.
the total costs of the State Budgets for the year 2021 is expected to reach 67,184 million euros, with a reduction of 2,148 million euros compared to its estimated amount for 2020. This decrease is mainly due to the large reduction in “transfers” of the account at 5,756 million. lower costs of coping with the pandemic due to the expected recession of the health phenomenon, as well as the global payment of 1,400 million euros for the retroactively retired which took place in 2020. Spending to face the pandemic in 2021 is around 2,500 million euros and is included in the “transfers” account.
In addition, 3,000 million euros are included in the account “credits on assignmentAnd it will be disbursed if necessary. In other words, they refer to a prediction that may not come true if the epidemic registers a significant recession in 2021.
As decided by the conference of Presidents of Parliament, the discussion of the Budget 2021 will take place in 4 meetings to the Commission on November 24, 25 and 26 and the plenary debate will begin on December 11 and the December 15.
What Staikouras Said – Skylakakis
Introducing the 2021 budget proposal, the Minister of Finance Christos Staikouras and the Vice Minister of Finance Theodoros Skylakakis stated the following:
“We present to the Greek Parliament for discussion the State Budget for the year 2021, at a time when societies and the world economy continue to be tested by the most serious health crisis of the last hundred years and the -consequent- worst annual worldwide recession since the end of the Second World War.
Unfortunately, the budget for 2021 is being prepared under paradoxical and extremely adverse conditions and under a regime of great uncertainty, which implies the volatility of the probability of the final maturity of the pandemic at the international level, but also the implications for the Greek economy possible in the interim period until the world economy returns to a path of normalcy, significant reorganization and sustainable growth.
This inherent uncertainty and the economic and budgetary implications of next year’s recession have led the European institutions to apply, and in 2021, in the budgets of the member countries of the euro area, the general escape clause. A decision that aims to protect, as far as possible, the productive and social fabric from the effects of the pandemic and not hinder the important recovery that, in any case, is scheduled for next year. In the context of the general escape clause, the trust that the country enjoys both in the markets and among its partners and creditors takes on even greater importance in budgeting. This is reflected in the interest rates on Greek bonds, which are currently at historic lows and are, in order of magnitude, lower than those with which the previous government borrowed. A finding that concerns both space prior to start the pandemic and interest rates how are they today.
Also very important in the 2021 budget are the European resources that the country secured in the July 2020 negotiations and will begin to flow in 2021 under the Recovery Fund and the React EU. THE development of the Greek economy By 2021, taking into account the strengthening of the recovery through the use of European resources, but also the effects of the second wave of the pandemic, which have a serious impact on the carry-over in 2021 (carry-over), it is estimated at 4 , 8%. In other words, the unfavorable scenario contemplated in the 2021 budget project, presented last October, is being implemented.
THE Recovery planned for 2021 is facilitated by measures to reduce the tax and insurance burden and to promote the creation of new jobs, which are included in the 2021 budget. Measures related – among other things – to the reduction of insurance contributions by three points from 1.1. 2021, on the abolition of the solidarity tax on income from private economic activity and on the possibility of contracting without insurance contributions for six months and under minimal bureaucratic conditions, which has already started on October 1, 2020.
Recovery is also facilitated by the comprehensive and targeted but prudent support measures in 2020, which will have budgetary implications in 2021, but also by additional measures of € 3 billion that have been earmarked as a special reserve in 2021 to address their financial consequences. . pandemic.
the total number of measurements To face the economic consequences of the pandemic, it is expected to reach 31,400 million euros, of which 23,900 million euros correspond to the year 2020 and 7,500 million euros to the year 2021.
The previous fiscal measures and the consequences of the 2020 recession lead to a forecast of the primary deficit of 3.88% of GDP for 2021, a percentage that combines the continuation of the expansionary fiscal policy imposed by the, but necessary, prudence. necessary to ensure the long-term balance of the Greek economy.
The 2021 budget, by its nature but also by the obligations of all countries within the European institutions, may not include permanent budget measures. Use of European resources for the rapid electronic modernization of state structures and parallel reforms planned by the Ministries of Finance and Labor and Social Affairs to effectively combat tax evasion and undeclared work, in line with the general government policy of promoting The new investments, which are significantly supported by the Recovery Fund, are expected to create permanent fiscal space beginning in 2022.
The dynamic recovery will allow, after the end of the pandemic, Greece to improve its fiscal figures in 2021, and then to enter, with the help of the reforms that are being and will be implemented, on a trajectory of reducing the investment gap, reduction of unemployment. and reduce the burden of taxes and insurance and entry into a virtuous long cycle fiscal stability, high, sustainable, smart and ecological economic growth and growing social prosperity.
