The new budget is being drafted with a focus on capping primary expenditures, as mandated by Brussels. Proposals from various agencies and ministries have been sent to the General Accounting Office, estimating expenses and revenues for the current year and 2025. Following mid-August, meetings at the Ministry of National Economy and Finance are expected to intensify.
According to the new Stability Pact rules, primary expenditures, which are key to fiscal discipline, cannot increase by more than 3%. This means Greece will not be able to exceed €115 billion next year, up from about €111.6 billion this year. Within this tight framework, the entire range of social policy measures, from tax reliefs and benefits to new public sector hires and pension increases, must be accommodated.
Additionally, the country must meet the target of a primary surplus of 2.1% of GDP. Current projections also indicate 2.6% growth, inflation easing to 2%, and further reduction of public debt to 146.3% of GDP by 2025 from 152.7% this year.
However, the new budget will include interventions and relief measures totaling approximately €880 million, as the government has promised.
These measures include:
- A new pension increase based on GDP growth and inflation (costing around €400 million),
- A 0.5% reduction in social security contributions (€225 million),
- The abolition of the business tax (€120 million),
- The permanent return of the Special Consumption Tax on agricultural diesel using a new method (estimated cost around €100 million),
- The extension of the VAT suspension on new buildings (€20 million),
- And an increase in the student housing allowance (€15 million).
Additionally, around Christmas, a special allowance is expected for pensioners with a “personal difference,” funded by taxing the windfall profits of refineries at a 33% rate, estimated to bring in €300 million. Based on last year’s model, the allowance will range from €100 to €250 for pensioners with a “personal difference” and total main and supplementary pensions up to €1,600 per month, affecting approximately 770,000 pensioners.
Moreover, the government aims to provide an additional allowance at Christmas to around 230,000 long-term unemployed, people with disabilities, and other vulnerable citizens. This will be the last extraordinary measure the government can offer before the “stop” that comes with the Stability Program in 2025. Final decisions on the allowance amount, criteria, and beneficiaries will be made in early September, once there is a clear picture of the fiscal space based on this year’s budget execution and growth figures.
September will also be the month for the Medium-Term Program, which will be submitted to the European Commission after negotiations with Brussels. This program, according to economic experts, must also consider any geopolitical developments in the Middle East and their impact on energy prices.
