Greece Submits Progress Report to the Commission Today

Today, April 30, 2025, Greece submits its Progress Report on the Greek economy to the Commission in accordance with the new rules of the Stability Pact. A key element of the report, which is submitted every April, involves setting upper limits for primary spending as defined by the Stability Pact. For Greece, this limit stands at 3.6% of GDP for 2025, with some flexibility due to the higher primary surplus expected this year and additional revenue from curbing tax evasion. Yesterday, April 29, an application was also filed to activate the escape clause for defense spending, seeking their exclusion from deficit calculations. The Commission’s final decision is expected in July after recommendations in mid-June. According to Finance Minister Kyriakos Pierrikakis, this clause alone will create a fiscal space of €600 million for 2026. Within this framework, tax cuts are being planned, to be announced by the Prime Minister in September during the Economic Policy Conference. These include tax rate reductions for the middle class, relief for property owners—possibly reducing or eliminating ENFIA for primary residences—and interventions in rent scales and living cost certificates. Officials note that precise resource assessments will occur over the next months as budget performance becomes clearer. The package may exceed €2 billion. The report projects continued economic growth for 2026, nearing 2%, up from 2.3% in 2025, largely driven by the Recovery Fund injecting over €6 billion via grants and loans. The primary surplus is forecasted to rise to 3% of GDP against the 2.4% budget target. However, external risks like the US-EU trade war, geopolitical tensions in the Middle East, and natural disasters could slow growth momentum and trigger inflationary pressures. Conversely, if benefits from credit upgrades, lower interest rates, and tourism income surpass estimates, the economy could achieve even higher growth rates.