In the new budget submitted to Parliament, the deficit increases from 5.7 billion in 2024 to 5.9 billion in 2025.
If all public bodies, legal entities, hospitals, social security funds (SSFs) and municipalities are included, some of which obviously have a surplus, then the deficit of the so-called General Government is limited to 1.4 billion euros. Prime Minister K. Mitsotakis, Minister of National Economy K. Hatzidakis and other government officials like to talk about the falsely called “primary surplus” of the budget, which amounts to 6 billion or 2.4% of GDP. This way, citizens think that they have money left over, the economy is doing well and therefore they can hope for some improvement in their lives.
This is a statistical trick, since the budget expenditures do not include the interest on the public debt, amounting to 7.4 billion, or 3% of GDP, which will however be paid and in priority.
To this primary result, as it should be called and not a surplus, once the interest on the debt is added, a fiscal deficit results. So why the celebrations?
GDP is projected to increase by 2.3% in 2025. This increase will come from investments, mainly in real estate, private consumption and services (tourism).
The country’s deindustrialization continues and the primary sector is shrinking at a rapid pace. Within a year (2nd half of ’23 -1st half of ’24) agricultural and livestock production decreased by 11%.
Soon, in addition to industrial products, we will also import most food and pay for it with new loans. The trade deficit in the first eight months of 2024 already amounts to 22.8 billion. With this productive model, which perpetuates the current political system, there is no future for this country and its people.
Taxes
The budget provides for additional taxes of 2.5 billion, from 66.7 in 2024 to 69.2 billion in 2025. In particular, VAT revenues will increase by 1.6 billion or 5.2%. Its rates remain the same, but are imposed at higher prices due to inflation. Personal income tax will also increase by 1 billion or 6%. Otherwise, the Mitsotakis government boasts that it is reducing taxes, collecting more taxes!
Public Debt
The debt of the Central Administration will rise from 401.6 billion in 2024 to 403 billion in 2025. Interest is paid on this entire amount. As with the deficit, the so-called intra-governmental debt (38 billion) is subtracted from the total debt, that is, the debt held by the various government agencies. Thus, the debt of the so-called General Government is limited to 365 billion.
This is then compared with the GDP, which increases mainly due to inflation (2.8% in 2024), and the debt-to-GDP ratio decreases from 169.5% in 2024 to 162.8% in 2025. In this way, the Government celebrates that it is achieving debt reduction. Anyone who wants to can believe it!
It is noted that the nominal amount of debt remains at unimaginable levels despite the privatizations of public property. In 2024, the Government collected 3.3 billion from the concession of the Attica Motorway and 780 million from the Athens International Airport.
In 2025, it will collect 1.3 billion from the concession of the Egnatia Motorway as well as many other amounts from concessions of lesser value. All this money must go to repay the debt, which, however, is still at its height. It is a “bottomless pit”.
European Recovery and Resilience Fund
From the Recovery and Resilience Fund (RRF), Greece will receive a total of 36 billion in loans and grants until 2026. So far, it has received 9.6 billion in loans added to the public debt and 8.5 billion in grants that will be repaid through the EU budget to which all member states contribute. However, the RRF has limitations on where these funds will be allocated.
Thus, for Greece, 37% must be given for the so-called “green transition” (wind turbines-photovoltaics) and 20% for the “digital transition”. In total, 57% has been committed in a specific direction.
Financial flows between Greece and the EU
Since our country’s accession to the EU, there has been much talk about the financial benefits that Greece will reap. According to the budget, in 2025 we will receive approximately 6 billion from the various EU Funds, with the largest amount of 4.2 billion going to the public investment program and 1.8 billion to the Agricultural Guarantee Account.
At the same time, we will pay the EU 2.7 billion, with the largest amount of 1.4 billion relating to our country’s contribution to the Union budget based on GDP. The net benefit is approximately 3.7 billion.
In exchange for this annual amount, Greece has ceded to Brussels most of its national sovereignty, its independent fiscal policy, its monetary independence, the ability to protect crucial sectors of its economy from a tariff perspective, and its obligation to comply with all the economic and political choices of the Union.
They have simply bought Greece for “almost free.”
P.S. The amount of interest of 7.4 billion that will be paid in 2025 exceeds the budget of the Ministry of National Defense, which is 6.1 billion (including military salaries, spare parts, fuel, and the purchase of any weapons systems). The Turks see this and are emboldened.
