Member States are now bound to specific fiscal rules and specific fiscal targets. Main weight will be given to the primary expenses of the General Government (excluding interest expenses), the annual increase of which will be predetermined in cooperation with the European Commission.
Also, the primary deficit should be below 3% of GDP, the structural deficit should not exceed 1.5% of GDP, and public debt should be reduced by 1% of GDP per year for those states- members (such as Greece) have public debt above 60% of GDP.
However, according to economic factors, the country will have three “pros” in its “quiver” compared to previous years.
The first concerns the fact that while the old rules required member states with high levels of debt to reduce debt every year by 1/20 of exceeding 60% of GDP, the new rules require at least a 1% GDP reduction per year of debt on average.
The second is the reaching of the agreement (as requested by the Ministry of National Economy and Finance) on the exemption of defense expenditures, which will be taken into account in the event that the limits of net primary expenditures are exceeded. Then, it will be examined whether the said excess is due to defense spending.
And the most important, according to the same factors, concerns the records achieved by the country in terms of investment expenditures and private investments. Already this year, investments are estimated to fluctuate at particularly high levels, due to the funds of the Recovery Fund. From the 12.1 billion euros estimated this year (3.6 billion euros will come from the Recovery Fund and 8.55 billion euros from the PDE), the amount will increase in 2025 to 13.5 billion. €5.1 billion will come from the Recovery Fund) and to €15 billion in 2026 (€6.7 billion will come from the Recovery Fund ending that year). In 2027 and 2028 the PDE will be reduced by 50 million euros, to 8.5 billion euros per year.
At the same time, it is noted that an effort will be made to contain the expenses of the General Government. The expenditure for employees in the whole of the General Government is estimated to decrease from 14.73 billion euros this year to 14.69 billion euros in 2025 and to 14.71 billion euros in 2026. This fund increases to 14, 74 billion euros in 2027 and 2028. If there is no drastic change, the hiring rule (1:1 ratio of civil servants leaving) is expected to be maintained, with the aim of having high primary surpluses, as, following all, they are the obligation of the country as well.
Source: RES
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