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Greece’s draft budget sees primary surplus 3.57% of GDP in 2018

Greek state budget will record a primary surplus of 3.57 pct of GDP, or 6.671 billion euros, according to the draft budget plan tabled to Parliament on Monday.

The draft budget also envisages a significant surpass of an 1.75 pct target for the primary surplus of 2017, which will be distributed as an one-off social dividend to support vulnerable households.

The Finance ministry, in an announcement, said that economic growth rates in the coming years will be adequate to ensure that both fiscal targets and fiscal space will be achieved to proceed with a reduction in tax rates to both households and enterprises.

The primary surplus of the general government in 2018, according to the methodology of the Funding Facility Agreement, is expected to reach 3.57 pct of GDP (6.671 billion euros), compatible with the program’s targets.

For 2017, the draft budget plan envisages that primary surplus will significantly surpass a fiscal target of 1.75 pct.

This development allows an one-off spending in the form of social dividend to support weak households.

The exact sum and the support measures will be specified after the release of budget execution data in November 2017.

Te sustainable achievement of fiscal targets for the third successive year, is the result of establishing fiscal discipline, a gradual recovery of confidence in the Greek economy and a significant creation of new job positions. All these, will allow the government to combine successfully fiscal responsibility with social justice.

For 2018, the budget incorporates the continuation of social policy actions and the beginning of new, such as:

  • a) introduction of a Social Solidarity Income, worth 760 million euros, aimed to offer relief to more than 250,000 households living in poverty,
  • b) distribution of 320 million euros, saved from primary operating spending, to protect vulnerable households and combating child poverty,
  • c) contribution worth 100 million euros to protect first homes by over-indebted households based on specific income and property criteria.

In coming years, economic growth rates are adequate to ensure both the achievement of fiscal goals and the fiscal space necessary to implement lower tax rates on households and enterprises,? the announcement said.

The draft contains also 12 measures worth 1.9billion euros that will cut allowances and tax-free expenses as well as taxation on Airbnb, and increase of Value Added Tax in certain islands.

the draft has yet to be approved by the country’s creditors. Its final form is expected in November.

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