Greece’s newly appointed finance minister, Kyriakos Pierrakakis, headed into work on Monday having to deal with a list of tasks, foremost among which is balancing the budget between the need to satisfy wants and demands – fair or unfair – and not to jeopardize fiscal stability, which markets have already factored into the lower borrowing rates.
There is no doubt, however, that the margins are relatively slim and do not allow certain demands to be met, and especially not the reinstatement of holiday bonuses for public employees (2.8 billion euros) and pensioners (€5 billion). The best possible scenario will allow for an increase in spending by €1.2-1.3 billion.
Even based on more optimistic estimates, bonuses of €1.4 billion could barely be included, as this would limit the scope for tax relief or other growth interventions that the administration has promised. Pierrakakis will be called upon to decide which option best serves the government’s goals.
Economic analysts have little doubt about the answer.
The general director of the Foundation for Economic and Industrial Research (IOBE), Nikos Vettas, argues that the use of any fiscal space “only makes sense if it serves a growth goal.” He specifically mentions the proposal that IOBE has repeatedly submitted for the creation of an incentive system to combat tax evasion among freelancers, with a deduction of the relevant expense from taxpayers’ taxable income.
Vettas also supports the need to prioritize support for kindergartens, which will help increase women’s participation in the labor market that is currently very low. “Choices must contribute to the transition to the country’s new productive model, and not be a one-off benefit,” he adds.
Parliamentary Budget Office head Giannis Tsoukalas believes that bonuses are not only impossible right now, but are also the wrong priority. “The absolute priority must be to reduce debt,” he says. “If space is found from additional tax revenues in 2025, it must be go to reducing taxes and social security contributions.”