The submission to Parliament of the revised fiscal targets, with reduced revenues and increased deficit and debt will follow.
The Ministry of Finance was forced to proceed with the revision of the 2021 Budget, as soon as the first quarter ended, as expenses due to the pandemic have exceeded forecasts made during its preparation.
The bill submitted to Parliament last night, entitled “State aid to businesses and non-profit organizations for natural disasters, emergency arrangements to support the economy, supplementary state budget and pension regulation”, includes an added budget which increases government spending by € 3 billion.
These are the costs related to the pandemic, which due to the long quarantine, have gone beyond the initial forecasts and in combination with the irregularities in tax revenues, threaten the achievement of the 2021 budget targets.
In November 2020, when the State Budget for 2021 was drawn up, the pandemic’s expenditure on supporting the victims of the pandemic was estimated at 7.5 billion euros.
But so far, with the emergency aid that has been disbursed, the relevant budget has already exceeded 13 billion euros. It has been clarified that this excess of 13 billion euros includes the amounts that have been earmarked for their payment to those affected by the pandemic, which includes both the amounts that have been paid (eg special compensation to employees, Repayable Advance Payment, etc.), as well as the cost of measures that are either ongoing (seventh repayable Advance Payment) or have been announced, such as emergency aid to food service industries, retail, etc.
The Supplementary Budget
In particular, article 30 of the bill entitled “Supplementary State Budget for the financial year 2021” provides the following:
The appropriations of the regular budget for the year 2021 of the Ministry of Finance and, in particular, of special entity 1023-711-0000000 “General State Expenditures”, increase by three billion (3,000,000,000) euros. These appropriations are entered under Detailed Expense Account 2910601058 “Appropriations for actions related to the implementation of measures to address the negative consequences of coronavirus COVID-19” of the above entity and special entity. “.
Other revisions follow
This revision is the first attempt to adapt the state budget to the new conditions created by the pandemic, while others will follow in the course of its implementation.
It goes without saying that an increase in government spending automatically leads to an increase in budget deficits.
In April, the Ministry of Finance will also submit revised budget for 2021 to Parliament, which will include the updated targets, in addition to expenditures, but also for revenues which are expected to be lower than the initial forecasts and of course, will be revised upwards, as well as the objectives for the budget deficit, and for the primary deficit.
The expansion of the country’s public debt will align with the budget deficit.
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