By Alexia Sotiriou

 

 

2024 will end with an impressive economic performance including an almost balanced budget, as the deficit, based on the latest estimates of the Greek economic staff, is expected to fall below 1% of GDP.

 

The primary surplus is also projected to fluctuate at higher levels than initial estimates, around 2.5% of GDP from 2.1% of GDP.

 

The updated figures are expected to be included in the final draft of the 2025 budget to be tabled next week (probably on November 20) in Parliament.

 

The particularly satisfactory course of revenues is due to indirect taxes and the measures adopted with the aim of combating tax evasion, boost state revenue, contributing to the further reduction of the deficit. Based on the latest estimates, the deficit this year will fall below 1% of GDP (probably close to 0.9% of GDP), while a further decline to 0.6% of GDP is predicted for 2025.

 

This specific element is of particular importance for the image of the Greek economy abroad, if one considers that in the past Germany was the country that made special reference to Greece's high deficits. Now the German economy is characterized by weak growth, capital outflow and of course it is faced with a political crisis which endangers the course of Europe's largest economy.

 

Primary Surplus

 

Regarding the primary surplus side, the latest estimates of the Ministry of National Economy and Finance show that it will fluctuate at higher levels than the initial forecast of 2.1% of GDP this year. As the Minister of National Economy and Finance Kostis Hatzidakis pointed out "the result will be greater than the already high target of 2.1%" predicting that "it will reach 2.5%, possibly even more." For 2025, it is predicted that the primary surplus will reach 2.5% of GDP.

 

However, it should be pointed out that the higher primary surplus does not imply more room for new benefits until the end of the year, due to the activation of the new fiscal rules (for all EU member states) and the limits which have been set for the ceiling increase in net primary expenditure.

 

Under the new rules, any excess of the primary surplus in the budget should be directed to the reduction of public debt and the commitment to increase net primary expenditures by 3.7% next year should be kept.

 

Systemic banks' heads express optimism over credit expansion and investments

 

 

The heads of systemic banks who participated in the discussion on "The new era for Greek banks", which was organized by the Bloomberg news agency, were particularly optimistic about the course of the domestic sector.

 

Among the critical questions that the four CEOs received, particular emphasis was placed on two points of their strategy for the coming years: credit expansion and the management of the excess liquidity that they have accumulated as a result of their high profitability in recent years.

 

Regarding lending, Eurobank CEO, Fokion Karavias, estimated that there will be strong credit expansion this year, which is expected to continue in 2025 and 2026. He predicted that Energy will stand out in this sector and stressed that Greece is a pioneer in the European Union in financing renewable energy sources. "The energy sector, for example, is one of the sectors that attract the majority of investment in Greece. And this is one of Europe's priorities regarding the new regulatory framework in August. To a large extent, this is due to the impetus provided by Greek banks to the market," he said.

 

"We are in a position to finance the economy more successfully," Piraeus Bank CEO Christos Megalou said, explaining that Piraeus achieved a 10% (or 3 billion euros) growth in its serviced portfolio and estimated that the momentum will continue over the next two years. "We can do more in mortgage loans and Piraeus Bank will soon present some innovative ideas that will boost mortgage credit," the head of Piraeus said, pointing out that mortgage loans are what is still missing from the credit expansion equation and if they are also mobilized, we will see more than a double-digit credit expansion rate.

 

On the same subject, the head of National Bank, Pavlos Mylonas, predicted very strong credit expansion, about 10%, in business loans, noting that disbursements in recent years have amounted to 24 billion euros. In the last 2-3 years, there has also been demand for consumer loans, he noted, however, due to higher repayments, there is a lag in this particular category of retail credit. Alpha Bank CEO Vasilios Psaltis said that business loans have increased by 67% compared to 2018, explaining that net credit expansion in this sector amounts to approximately 9 billion euros. Alpha Bank has played a leading role in financing some of the most important Foreign Direct Investments in the sectors of airports, Renewable Energy Sources and Infrastructure, Psaltis stressed. Domestic systemic banks appear open to investments abroad, with the four CEOs admitting that they are looking for opportunities for investments abroad.