Greek Plan Vows to Keep Budget Surplus at 3.5% of GDP Until 2022



 

Greece has vowed to keep its primary budget surplus — the balance before debt servicing — at 3.5 percent of GDP until 2022 according to a document released describing the country’s post-bailout strategy.

The 106-page document, which was presented at a meeting of eurozone finance ministers in Sofia in April, is based on the assumption that Greece will receive generous debt relief.

Athens’ plan for growth will be discussed at the next euro-area finance ministers’ meeting on June 21, Greek Prime Minister Alexis Tsipras told a cabinet meeting earlier this week.

“Debt relief is a crucial factor which will contribute definitively to boosting growth dynamics” in Greece, he said.

Greece is due to exit its  bailout program and start making its own independent policy on Aug. 20.

After that, its main objectives are to ensure fiscal sustainability and foster inclusive, fair and sustainable growth, using available financing tools, according to the strategy.

It foresees an average economic expansion of 2.1 percent between 2020 to 2022, supported by stronger private consumption (1.2 percent), job growth (0.4 percent) and a 7.6 percent pick-up in investments.

According to the plan, Greece’s tax policy will contribute to attracting productive investments and increasing productivity by reducing taxes for businesses.

The report highlights that the tax cost in Greece is high, when compared with countries with similar competitiveness levels, but not excessively high on a European level.

Among the proposed tax reforms listed in the plan is reducing tax evasion, and stamping out the illegal trade of fuel and tobacco products.

The blueprint also assumes that medium-term measures will be introduced to help secure the viability of Greece’s debt, without referring to how much this may be.