A large increase in GDP, significant primary surpluses, a reduction in unemployment to pre-crisis levels and a de-escalation of debt, the Medium-term Financial Structural Plan 2025-2028the main points of which were presented at a press conference by the Minister of National Economy and Finance Kostis Hatzidakis with Deputy Minister Thanos Petralia. And as the minister pointed out, in the medium term “we achieve fiscal stability, with debt reduction, growth and income growth”.
The Plan is forwarded with a letter from the minister to the Parliament, to be discussed on Friday in the competent Committee, in the presence of the Bank of Greece and the Fiscal Council. The final draft will then be sent to the European Commission to be approved on November 28 by Ecofin.
According to the Mid-Term forecasts:
- Public debt will fall from 153.7% of GDP today to 133.4% of GDP in 2028.
- The fiscal deficit (with a limit of 3% of GDP) from 1% of GDP this year, will be formed to 0.6% of GDP in 2025, to 0.8% of GDP in 2026, to 1.1% of GDP in 2027 and to 1.2% of GDP in 2028.
- The primary budget surplus, from 2.4% of GDP this year (against an initial forecast of 2.1% of GDP) will be 2.5% of GDP in 2025 and 2.4% of GDP for each of next years.
- The nominal GDP, from 232 billion euros will be formed to 242 billion euros in 2025, to 253 billion euros in 2026, to 263 billion euros in 2027 and to 272 billion euros in 2028. According to the minister, the forecasts these are conservative, as the Commission does not take into account the inflows from the Recovery Fund and the NSRF.
- The percentage increase in GDP will be as follows: 2.2% this year (2.2% the EU forecast), 2.3% in 2025 (1.8% the Commission), 2% in 2026 (0.7% the EU predicts), 1.5% in 2027 (instead of the 0.7% the EU predicts) and 1.3% in 2028 (the Commission predicts 0.8%). As the minister repeated, the Commission also does not take into account the Recovery Fund and the NSRF.
- The minimum wage will increase from 650 euros in 2019 to 950 euros in 2027 and the average wage from 1,046 euros in 2019 to 1,500 euros in 2027.
- Unemployment will decline from 10.5% this year to 9.7% in 2025, to 9.2% in 2026, to 8.7% in 2027 and to 8.5% in 2028.
As Mr. Hatzidakis said, the Medium term also includes eight key structural interventions for: Demographics, housing, dealing with the consequences of the climate crisis, strengthening the health system, upgrading the education system, limiting tax evasion which will allow further tax reductions, strengthening entrepreneurship and reviewing spending for their more rational distribution.
For the latter, the minister indicated indicatively the targeting of social benefits, unemployment benefits, operating costs (e.g. state cars), pharmaceutical costs and the costs of General Government and Local Government bodies.
As the main medium-term target for the EU member states will be the primary net expenditure limit and not the primary surpluses, the minister pointed out that an agreement was reached between the country and the Commission – due to the better fiscal performance this year – for an additional 700 million euros in 2025 and a total of 4 billion euros over four years. This, Mr. Hatzidakis said, creates more fiscal space for pension spending, operational spending and national defense spending.
According to the minister, with the Medium Term, the following are achieved:
- Great debt reduction.
- Promotion of structural interventions.
- Reducing tax evasion (estimated additional revenue of €2.5 billion in 2027).
- Covering increased defense spending.
- Strengthening the welfare state.
- Reducing unemployment.
- Lowering taxes and boosting incomes.
Concluding, the minister said that “the main message is that with the Plan we take the economy several steps higher and implement all the commitments of the ND”.
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