Greece sets out ambitious budget based on faster growth
Athens committed to 3.5 per cent budget surplus next year, says minister
Greece revealed an ambitious budget for next year that assumes growth will accelerate to 2.8 per cent from a projected 2.0 per cent this year, driven by higher investment inflows and cuts in corporate and personal income tax.
Theodoros Skylakakis, deputy finance minister, said on Monday the centre-right government was also committed to achieving a 3.5 per cent primary budget surplus next year — before making debt repayments — as agreed with Greece’s international creditors.
Greece will hit the 3.5 per cent surplus target this year, but faces a projected fiscal gap of about €800m in 2020, according to EU monitoring officials visiting Athens last week.
Mr Skylakakis gave reassurances the government will find enough additional measures to close the gap before the budget is presented to the European Commission on Friday.
The finance ministry plans to boost revenues by raising the percentage of electronic payments required to earn tax breaks and at the same time increase annual taxes on luxury second homes outside big cities.
Investment is projected to rise 13.4 per cent in 2020 compared with an 8.8 per cent increase this year. Private consumption would rise by 1.8 per cent against 0.6 per cent in 2019, according to the budget.
“Next year’s growth target is reasonable given recent progress in removing bureaucratic obstacles to investment and the projected impact of corporate and personal income tax cuts,” said Miranda Xafa, a former Greek representative to the IMF.
Greece also said on Monday it had hired several international investment banks to reopen its March 2029 debt issue, as it looks to take advantage of a sharp fall in its borrowing costs.
Greece, once the focus of the eurozone debt crisis, returned to the international bond market this year and saw its borrowing costs hit record lows as eurozone government bonds surged.
Greek 10-year government bonds yielded 1.442 per cent on Monday afternoon, down from more than 3 per cent in March.
Source >> https://www.ft.com/content/1b5b1ea4-e8fc-11e9-a240-3b065ef5fc55