Exceeding 4.4% of GDP, the primary budget surplus in 2025, according to a forecast by Bank of Greece Governor Yannis Stournaras.
Recall that the government’s target was for the primary surplus to be 3.7%. Exceeding the target, if certified by Eurostat on Wednesday, creates fiscal space for the government to proceed with measures to alleviate the negative effects of the war in the Persian Gulf.
In an interview published yesterday Sunday in Kathimerini, the governor of the BoE said that it seems that there is fiscal space for the government to take new support measures. “According to our information, it may be even bigger than what we believed until now. Maybe the primary surplus in 2025 will exceed 4.4% of GDP. But the support must be specific, temporary and targeted,” he said.
With regard to inflation, Stournaras pointed out that the 1% higher inflation in Greece compared to the Eurozone is a chronic problem. “Now, we have a positive output gap, there is demand that exceeds production capacity and this is the main reason why inflation is higher. There are of course other reasons, sectors where there is concentration, so what we are advising the government is to look at the issue of competition and where there are barriers to entry for companies,” he noted.
On tax exemptions, he clarified that the BoE is not recommending the government to cut them, but to look at them again and see if they are sufficiently targeted.
For example, he added, the BoE considers it appropriate that tax exemptions be better targeted based on social and economic objectives. “Is it time to have a new Georgakopoulos Commission and look again at the tax burden, including tax breaks? We are talking about reducing VAT, while if we take into account the VAT tax exemptions, it is already reduced.”
