The government of Alexis Tsipras successfully passed the 2018 budget in Greek Parliament on Tuesday, as they also confirmed that elections will be held in 2019.
The approved 2018 budget, which also had a generous social welfare allocation of nearly 2 billion euros, marks Greece’s exit from the fiscal adjustment programme in August 2018, its return to the markets and the strengthening of growth rates.
The country’s first successful swap programme along with the estimates regarding the key figures of the Greek economy in 2018 are setting the framework for achieving this goal. A prominent feature of the positive developments is the significant decline in Greek government bond yields. Ten-year bonds fell for the first time to under 4%, paving the way for Greece to tap the markets again in the near future.
Confidence in the Greek economy is reflected on the budget estimates for both the primary surplus – which, for another year in 2017, significantly exceeded initial estimates – and the course of key economic fundamentals.
The primary surplus of 2018 is estimated to reach 3.82% of GDP against a 3.5% of GDP target in the medium-term fiscal strategy programme. In 2017, the primary surplus exceeded the original target of 1.7% of GDP and amounted to 2.44% of GDP, incorporating the expenditures of 1.4 billion or 0.78% of GDP for the social handout, the retroactive returns to pensioners and the payouts to Public Power Corporation (PPC).
The Greek economy is projected to grow by 2.5% in 2018 compared to 1.6%, which is projected to be 2017’s growth rate. In particular, GDP is projected to reach 184.691 billion euros in 2018 compared to 178.579 billion in 2017.
Revenue from the new budget is expected to reach 54.244 billion euros compared to 52.142 billion euros this year, while spending will reach 55.188 billion euros compared to 57.265 billion euros in 2017.