Greece‘s Finance Minister Kostis Hatzidakis is in a situation that most of his colleagues in the Eurozone probably envy him, Germany’s Handelsblatt reports in an op-ed. The “tanks” have been “filled” beyond predictions. In 2024, 68.8 billion euros flowed into the coffers, almost two billion more than estimated in the budget.

By the end of the year and as Hatzidakis also spent less than anticipated, the end result is a budget surplus of €369 million. The Ministry of Finance was expecting a deficit of 3.6 billion. Even more impressive is that the surplus on the primary budget balance, which excludes debt service, and it was €8.7 billion, almost double what was previously estimated.

This is an astonishing shift from fiscal deficit “offender” to “model student”. It should be reminded that in 2009, Greece had a budget deficit of 15.2% of GDP. This was an unprecedented deficit record in the euro area and a prelude to the Greek sovereign debt crisis.

Even more surprising is the fiscal consolidation of recent years. Thanks to strong economic growth, lean budgeting and timely repayments, Greece has reduced its public debt ratio faster than any other Eurozone country since 2020, by more than 55 percentage points, from 209.4% to 154% of GDP.
Finance Minister Hatzidakis repaid €7.93 billion of loans early last December. This year, he plans to repay another 5.3 billion euros, which, according to the plan, are not due until 2031 to 2042.

Fighting tax evasion

Greece had already significantly exceeded its fiscal targets for 2023. The deficit amounted to 3.76 billion euros. The finance minister had forecast a deficit of €8.34 billion. Revenues were 1.8 billion euros above plans, while spending was 2.77 billion euros below projections.

The finance minister attributed the additional revenues of the last two years mainly to successes in the fight against tax evasion. The digitisation of the tax administration is paying off.

Tax authorities are also incentivising consumers not to use cash. Anyone who pays by card is automatically entered into a tax lottery. For every card transaction there is a lottery ticket. Each month a €50,000 main prize, five €20,000 prizes and 550 prizes of €5,000 and €1,000 are drawn.

Finance Minister Kostis Hatzidakis sees the fight against tax evasion as a “socio-political gamble” and promises that “we will return to society as much of the additional revenue as EU fiscal rules allow“. The government of Prime Minister Kyriakos Mitsotakis has already cut taxes and social security contributions across the board since taking office in 2019. For example, it cut the corporate tax rate from 24% to 22% in 2021. The property tax was also reduced. A further reduction in social security contributions is also being discussed.

However, the Finance Minister wants to take his time with his tax plans. Treasury says it wants to wait to see how sustainable the additional revenue is in the coming months.

A decision on the tax cuts is to be made in September. Then the Prime Minister will give his annual keynote speech on economic and financial policy at the opening of the TIF. There are many indications that Mitsotakis will not disappoint taxpayers. After all, there will be elections in Greece in 2027.