Greek budget envisages 2.5 pct growth rate in 2019
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
The Greek government on Wednesday tabled in Parliament the 2019 state budget which envisages an economic growth 2.5 pct in 2019 from 2.1 pct this year and a primary surplus of 3.98 pct of GDP this year, up from a budget target for a surplus of 3.5 pct.
The Finance Ministry said that this overshooting of the fiscal target offered significant room to use this over-surplus as a social dividend to weaker social groups.
It added that satisfactory fiscal performances in the years 2015-2018, along with an improvement of macroeconomic data, allowed a gradual change in the mixture of fiscal policy with the aim to strengthen households’ available income, supporting sustainable growth and dealing with chronic deficits in social protection.
This change in policy mixture will be implemented through a package of measures: reducing a special property tax by average weighted 10 pct, lowering social insurance contributions for the self-employed, professionals and farmers, lowering taxes on distributed profits, and gradually reducing corporate income tax from 29 pct to 25 pct.
The positive measures include the reduction of Real Estate Property Tax (ENFIA) by 260 million euros, the reduction of professionals, self-employed and farmers’ social security contributions by 177 million euros, a housing allowance allocating totalling 400 million euros, a subsidy for the insurance of young workers of 51 million euros and another 22 million euros channeled to special education.
The cost of these measures is estimated at 0.5 pct of GDP, up by around 150 million euros compared with fiscal interventions included in a pre-draft budget.
The budget plan will be debated in a Parliamentary committee by November 26, before a plenary debate starting December 12. A vote on the budget plan is expected by December 18.
GDP to reach 192.749 bln
The Greek Gross Domestic Product is estimated to reach 192.749 billion euros in 2019, an increase of 2.5 pct from 2018, according to the state draft budget, with private consumption rising by 1.1 pct (after an 1.0 pct increase this year), while public consumption is expected to rise by 0.6 pct (0.2 pct in 2018).
Private investments are projected to rise by 11.9 pct in 2019, after a 0.8 pct increase this year, exports to grow by 5.8 pct (7.5 pct) and imports to grow by 5.2 pct (3.4 pct in 2018). Unemployment is expected to fall to 18.2 pct in 2019 from 19.6 pct this year and the inflation rate to rise to 1.2 pct from 0.8 pct.
The draft budget noted, however, that risk factors were gradually transferred from the domestic to the external environment amid trade tensions, geopolitical tensions and political instability in the eurozone.
The country’s public debt is projected to reach 323.5 billion euros in 2019, or 167.8 pct of GDP, down 12.6 percentage points from 2018 (335 billion or 180.4 pct of GDP), reflecting the creation of a cash buffer which will be partially used in 2019. Privatization revenue were projected to reach 1.531 billion euros.
State budget net revenues, on a fiscal basis after deduction of tax returns, are expected to reach 53.806 billion euros in 2019, up 0.7 pct from targets, reflecting a 2.5 pct increase in taxes on goods and services, a 565 million euros rise in VAT and a 51 million euros decline in consumption taxes. Property taxes are projected to ease by 215 million euros, income taxes are projected to rise by 1.8 pct and revenue from social contributions is expected to rise by 8 million euros. Tax returns are expected to reach 4.818 billion euros in 2019, up 633 million from budget targets. Public Investment Programme revenues are projected to reach 3.740 billion euros, up 150 million from targets.
State budget spending is expected to reach 56.956 billion euros in 2019, down 573 million from targets, with primary spending at 49.956 billion euros (down 623 from budget targets). Payroll spending will reach 13.016 billion euros, up 25 million from targets, while Public Investment Programme spending will reach 6.750 billion euros in 2019.
Source: ANA-MPA