Growth, Tax Evasion, Investments: Key Budget Execution Milestones Shaping New Benefits

Multiple factors will determine the scope of benefits announced by Prime Minister Kyriakos Mitsotakis at the 2026 Thessaloniki International Fair (TIF), with the central prerequisite being that 2026 budget execution generates permanent, repeatable fiscal space. Only then can interventions for 2027 be sustained without conflicting with the EU’s net expenditure path—a key constraint on permanent policy choices. As Deputy PM Kyriakos Pierrakakis recently stated, fiscal space ‘always concerns the next year’, meaning no additional room is available for immediate use in 2026. Crucially, he highlighted the fight against tax evasion as the primary source of sustainable revenue, citing €2.2 billion already identified through this effort—vital for recent revenue performance. Therefore, the 2026 TIF benefit package won’t hinge on a single announcement but on a chain of developments from early spring through October, extending beyond the September fair to align with new EU fiscal rules. Initial fiscal space for 2026 is estimated at €750 million; however, a significantly larger cushion over the 2026–2027 biennium is ruled out unless revenue overperformance proves structural and growth validates underlying assumptions. Under the EU’s new framework, the key isn’t just achieving a stronger primary surplus—it’s ensuring net primary expenditures stay within the ceiling set in Greece’s Medium-Term Fiscal Strategy. Even with higher revenues, permanent benefits or tax cuts cannot rely on cyclical surpluses but must be backed by durable revenue gains or equivalent savings to avoid breaching the expenditure ceiling. In practice, revenue overperformance bolsters credibility and debt reduction—but doesn’t automatically translate into permanent benefit packages unless it fits within the spending rule. For 2026, the Independent Authority for Public Revenue (AADE) remains pivotal, targeting an additional €2.5 billion from curbing tax evasion via new digital tools, targeted audits, and advanced data analytics. The more convincing this performance, the stronger the case for converting part of that space into permanent tax relief—including adjustments to tax brackets, presumptive taxation, or contributions—without violating the expenditure cap. The second major challenge lies in growth and investment, especially as EU-funded projects under the Recovery and Resilience Facility (RRF) accelerate.