These remarks were made by the Minister of National Economy and Finance, Kostis Hatzidakis, speaking today at the joint meeting of the Economic Affairs and European Affairs Committees of the Parliament regarding the Medium-term Fiscal-Structural Program 2025-2028, in view of its submission to the European Commission.
Referring to the new fiscal rules that apply throughout the EU, Mr. Hatzidakis emphasized that the most important change is the introduction of the expenditure rule. “This rule allows the implementation of a counter-cyclical policy. In other words, it allows the Greek government and the other governments of the member countries to keep spending stable even in times when the economy is not doing well. If the economy is overperforming we will not be able to exceed the spending limit. However, if the economy does not perform, we will not be punished with further restrictive policies but the reserve will be used to deal with the difficulties.”
The minister presented the main axes of the program, noting the following:
-Expenditure: Public expenditure increases by around 3.7 billion euros in 2025 and 2026 and by around 3.2 billion euros in 2027 and 2028. At the end of the four-year period it will be higher by 13.8 billion, compared to with this year. “With the main argument of the overperformance of the budget and the economy, we achieved this amount is increased by 4 billion compared to the Commission’s initial proposals“, emphasized Mr. Hatzidakis.
-Primary surplus: This year the economy will achieve a surplus of 2.4%, against a target of 2.1%, despite extraordinary spending, which is mainly due to the growth of the economy and the fight against tax evasion. “Due to this primary surplus we managed and convinced the EU that we could further increase spending. Because we are convinced that the capacities and structures are now in place to achieve debt reduction alongside a reasonable increase in spending“, he said. He added that the surplus for the whole of the next four years will be at the level that is formed this year (2.4%), while with the previous fiscal framework the target would have been 4%. “So the new rules make it easier for Greece to achieve its goals.”
-Total deficit: It will remain for the entire period close to 1% or even below it, that is, well below the 3% limit set by the pact. “This is a household item and sends a message of confidence, at a time when 7 EU countries (including Italy, France and Belgium) are in excessive deficit. Imagine what would happen if Greece entered again, due to a frivolous and populist policy in an excessive deficit process. What would this development remind and what message would the government send to the citizens who undergo sacrifices to house the public finances. We would be indulgently inferior to the circumstances. It is something that we will not allow ourselves, neither we in the Ministry of Finance nor the Prime Minister, to carry out populist policies, the cost of which will be asked to be paid by the Greek citizens, especially the weaker ones”, underlined K. Hatzidakis. He also reminded that in the last few days Greece, in addition to Italy, has also been borrowing cheaper than France in terms of five-year bonds. “This is something that didn’t happen, it did. It is the result of policies that ensure benefit for taxpayers. Only thanks to the recovery of the investment grade, for what we borrowed in 2024, taxpayers will pay 800 million less over a decade.” he added.
-Debt: It is projected to decrease drastically, by 20 percentage points of GDP from 153.7% in 2024 to 133.4% by 2028, a reduction that is the largest in the EU. And it follows a reduction of 45 points from 2020 until 2023. “The 2028 Greece will not be the country with the highest debt in the EU”the minister said. He also clarified that the change in the method of recording for the deferred interest from the loans of the second memorandum does not change anything. «The difference is the distribution of the specific fund over time. That is, if the whole of 2032 will be recorded or if it will be spread over a period from 2012 onwards. In either case, the course of debt reduction, neither the sustainability analysis, nor the financial needs of the Greek government, nor the amount of the allowed expenses are affected. There is a relevant provision in the new fiscal rules. After all, this year Greece will proceed with an early repayment of part of the public debt, 7.9 billion from the loans that were taken out during the first period of the memorandum, because we can do it.”
-Growth: We will have a continuous increase in GDP, which in nominal terms will rise from 232 billion in 2024 to 272 billion in 2028. But real GDP will also grow in very positive terms within the context of the Eurozone and the European Union. “We are already second in the EU by 2the quarter in growth rate. This is the only way to converge with the EU, after the “knife” of the crisis we lost a quarter of our income“, pointed out Mr. Hatzidakis.
-Unemployment: It is projected to decrease from 18% in 2019 to 10.3-10.4% on average on an annual basis in 2024 and 8.5% in 2028 with conservative forecasts.
-Salaries: They will continue to rise: The minimum wage from 650 euros in 2019 and 830 euros which is today, is predicted to reach 950 euros in 2027. The average wage from 1,046 euros in 2019 and 1,258 euros at the end of 2023 is predicted to reach in 2027 at 1,500 euros. Already now it is over 1,300 euros.
-Reforms in areas such as demographics, housing, Health with recruitment of permanent medical and nursing staff, upgrading hospitals, control of supplies, upgrading the education system with non-state universities that will bring investments and jobs, strengthening entrepreneurship and the spending review so that taxpayers’ money goes further than it does today.
“What we said, that’s what we do. Some others promised more. The citizens chose New Democracy and New Democracy is absolutely committed to its program, as evidenced in the medium-term program. It is a serious, measured program that achieves on the one hand small deficits, reasonable primary surpluses and significant debt reduction. But – because of growth and the reduction of tax evasion – it also allows us to have promised wage growth, unemployment reduction, national defense spending, support for the welfare state and income growth. We don’t promise miracles. We are not magicians but serious, responsible, efficient and we do what we promised”, concluded Mr. Hatzidakis.
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