ATHENS – [ANA-MPA]
The draft state budget for the year 2025 was tabled in Parliament on Monday, October 7, for discussion in the Standing Committee on Economic Affairs. In a letter to the members of the Committee, National Economy and Finance Minister Kostis Hatzidakis and Deputy Minister Thanos Petralias stated:
“The draft 2025 budget is submitted at the same time as the submission to the Council of the European Union and the European Commission of [Greece’s] first Medium-Term Fiscal-Structural Plan 2025-2028 (MTP), based on the new European economic governance framework. Therefore, the macroeconomic and fiscal figures reflected in the draft are in harmony with the estimates of the MTP.”
The ministers noted that in the last three years, the global economy has faced successive crises due to interconnected economic, climatic and geopolitical disturbances. Despite signs of recovery, the international economic environment is characterised by increased uncertainty linked to recent geopolitical developments in the Middle East, the war in Ukraine as well as short-term factors, such as tighter monetary policies and the reduction of fiscal support internationally after the pandemic and the energy crisis, but also with the significant and accelerating effects of climate change.
In this adverse and uncertain international environment, the Greek economy is proving to be resilient, they said. GDP growth is forecast to reach 2.2 percent in 2024 and 2.3 percent in 2025, compared to forecasts for 0.8 percent and 1.4 percent in the Eurozone in the spring review of the European Commission. Investment is expected to increase by 6.7% in 2024 and 8.4% in 2025, while the unemployment rate is forecast to decrease from 10.3% in 2024 to 9.7% in 2025. The Gross Domestic Product (GDP) in nominal terms in 2025 is expected to increase by approximately 10 billion euros and the ratio of the General Government’s debt to GDP to decrease by 4.6 percentage points. The consumer price index is estimated at 2.7% in 2024 and is expected to decelerate further to 2.1% in 2025.
The draft budget 2025 includes all the interventions that have been announced, including those presented at the Thessaloniki International Fair (TIF). The new permanent fiscal measures affecting the budget bring additional fiscal costs in 2025 compared to 2024, amounting to 1.1 billion euros, while a number of other interventions are financed by resources of the Public Investment Programme and the Recovery and Resilience Fund (RRF). In this context, investment expenditure is expected to increase from 13.1 billion euros in 2024 to 14.3 billion euros in 2025, in addition to the resources of the RRF loan arm.
In 2025, the debt of the General Government is predicted to be 361.4 billion euros or 149.1% of GDP, showing a decrease of 4.6 percentage points of GDP compared to 2024.
The new fiscal interventions, complemented by a series of institutional measures, focus on supporting disposable income, boosting investment and innovation, addressing demographic and housing issues, as well as addressing the challenges of climate change.
The interventions are within the fiscal targets set in the MTP, as net primary expenditure is expected to increase by 3.6% in 2025 compared to 2024, while the relevant target amounts to an expenditure increase of up to 3.7%. In this context, the primary balance of the General Government is expected to be 2.4% in 2024 and 2.5% in 2025, and the overall balance is forecast to be -1.0% in 2024 and -0.6% in 2025.
The 2025 budget is called upon to reconcile the goal of fiscal stability with the need to increase the disposable income of citizens, as well as addressing contemporary challenges and cover the necessary expenses for strengthening national defence.
The aim is to ensure the strong development of the Greek economy, a further upgrading of the country’s credit rating and greater well-being of the citizens. To achieve this it is necessary to channel limited fiscal resources with the maximum possible economic and social efficiency, the ministers noted.
In statements regarding the submission of the draft state budget, Hatzidakis said: “The 2025 Budget sends a message of optimism! It has 12 different pay raises and 12 tax cuts. It confirms that our economy will grow much faster than the European Union average. And that unemployment will decrease even more. The government is taking another important step towards the full fulfillment of its pre-election pledges!”