June 22, 2021

Another huge primary surplus year in 2019

The 2019 primary budget surplus will end up at 3.7-3.8 percent of gross domestic product, according to the latest estimates by the State General Accounting Office. This will exceed the target for 3.5 percent of GDP by 0.2-0.3 percent, or 400-600 million euros.

In fact the primary surplus overrun of last year’s budget ranged around 2.7-3 billion euros compared to the original target if one takes into account the additional measures implemented over the course of the year without being included in the budget. That would mean, for instance, that the budget could have been within its target without any takings from the Single Property Tax (ENFIA).

The original budget had provided for a primary surplus of 3.6 percent of GDP, or 6.9 billion euros. It therefore offered a safety cushion of just 199 million euros above the target of 3.5 percent.

However, the budget managed to accommodate far more: the pre-election measures by Alexis Tsipras' government, the so-called 13th pension handout in May, and the reduction of the tax rates on food service, food and energy that set the public coffers back 1.15 billion euros.

Then the New Democracy administration reduced ENFIA by 205 million euros, the corporate tax deposit by 138 million; it accelerated the payment of the heating oil subsidy that cost 84 million, paid the public service dues to Public Power Corporation amounting to 150 million euros, and distributed a social dividend of 215 million euros. Along with some additional spending on defense, healthcare and various other sectors, the extra expenditure of the new government exceeded 1 billion euros, as Finance Minister Christos Staikouras has said. Therefore, in total, the overrun came to 2.7-3 billion euros, the Accounting Office estimates.

There have been huge primary surplus excesses every year since 2016: In 2018 the overrun came to some 3.5 billion euros, with 2 billion being distributed as a social dividend and 1.5 billion going toward the cash buffer.