The new fiscal rules are expected to be determined by the plenary session of the European Parliament on April 23, just a few days before it stops its work ahead of the European elections. With the passing of the new rules, consultations will begin between each EU member state and the Commission in order to find the appropriate “recipe” for each country which will be reflected in the new 4-year medium-term Structural Budget Plans.
“This will happen in the period from the end of June to the end of September. So a hot fiscal summer is expected,” European Commissioner for Economy Paolo Gentiloni said in statements to public broadcaster ERT.
It is worth noting that after the changes, the main criterion for compliance with the rules is not the deficit or primary surplus (2.1% of GDP in 2024 and 2025 for Greece), but the upper limit of the increase in net primary expenditure.
For this year, the specific limit for Greece was set at 2.6%, while in the negotiations that will take place with the European Commission, the specific limit will be determined depending on the course of the Greek economy.
Special emphasis is placed on the announcement of the European Commission Spring Economic Forecasts on June 21, as they will form the basis for the goals to be set per member country. The determination of the upper limit of net primary expenses is expected to form the basis for the four-year plan that our country, like the other member states, will submit to Brussels by September 21. However, it remains to be confirmed if the specific deadline will be met or if it will need to be extended.
April’s milestones
One day before the passing of the new economic governance rules by the European Parliament on April 23, Eurostat will announce the data for each country in the context of the excessive deficit process.
As Bank of Greece (BoG) governor Yannis Stournaras revealed at the Delphi Economic Forum, the primary surplus reached approximately 2% of GDP in 2023 from 1.1% of GDP which was the target. According to sources, the primary surplus appears to have closed at 1.7% of GDP last year. This data will be validated by Eurostat.
At the end of the month, Athens plans to send the European Commission a “summary” of the Stability Program based on the current obligation under existing fiscal rules. According to sources, the government is considering to include the downward revision of the forecast for a growth rate of around 2.5% this year from 2.9% that was included in the 2024 budget. This forecast is expected to be in line with the forecasts of the Bank of Greece, the European Commission and other international organizations.
A determining factor for the revision of this year’s growth rate was the preliminary data of the Hellenic Statistical Authority (ELSTAT) which showed that the growth rate in 2023 stood at 2% against a forecast of 2.4%. In terms of primary surpluses, the target for 2024 and 2025 will be maintained at 2.1% of GDP.
Stournaras has underlined that “if the government manages to maintain primary surpluses at 2% in the coming years and proceed with the necessary structural reforms, it has nothing to fear.”
