Greek National Economy and Finance Minister Kostis Hatzidakis on Monday tabled the 2024 draft budget in Parliament. This envisages a growth rate of 3%, a harmonized inflation rate of 2,4%, a 12.1% increase in investments, an unemployment rate of 10.6%, and a primary surplus of 2.1% of GDP.
The draft budget also includes measures to support income, raising the tax-free allowance for families with children, raising the minimum guaranteed income, pensions, and pay increases for public servants. The budget also envisages a 15% increase in subsidies to state hospitals.
“The 2024 budget is the first in 13 years with the country’s credit rating back to investment grade. An achievement based on the difficult efforts and sacrifices of Greek society, combined with the prudent and efficient fiscal policy of the last few years, the successful management of external crises, and political stability in the country. However, the 2024 budget is drafted a few days after successive natural disasters that hit the country in August and September, a sign that the impact of climage change will be here and needs answers on a permanent basis. That’s why it is a priority to fortify the country against such extreme natural phenomena by building stronger infrastructure, strengthening civil protection and prevention. On a fiscal level it is obvious that additional funds will be needed in annual budgets, strengthening insurance, speed and efficiency of state support.
At the same time, the international economy shows signs of slowdown, while fiscal risks in European countries are rising, the inflation rate – although falling – remains at high levels globally especially for food items, while restrictive monetary policy has a negative effect on credit expansion. In this adverse and uncertain international environment, the Greek economy is proving to be resilient. The growth rate is expected to reach 2.3% this year and 3% in 2024, with the Gross Domestic Product expected to rise from 208 billion in 2022 to 224 billion in 2023 and 235 billion in 2024. The harmonized inflation rate is projected to fall to 4% in 2023 and 2.4% in 2024. Investments are expected to rise by 8.3% this year and by 12.1% in 2024, while unemployment is expected to fall from 11.2% in 2023 to 10.6% in 2024.
Tax revenue will rise by 9.1% in 2023 without imposing any new taxes, a development largely related to high growth rates, while wages grew 7.6% in the second quarter of 2023. The government has announced a package of measures to combat tax evasion to further reduce VAT losses. The general government balance showed a surplus of 0.1% of GDP in 2022 and it is expected to rise to 1.1% of GDP this year. The primary surplus will rise to 2.1% of GDP in 2024 and the general government debt will fall spectacularly from 171.4% of GDP in 2022 to 159.3% in 2023 and 152.2% in 2024.”
