Parliament's Budget Office report: 2020 draft budget compatible with fiscal goals, uncertairties remain

The 2020 draft budget plan tabled in Parliament by the Greek government is compatible with achieving the fiscal goal for a primary surplus, the Parliament's Budget Office said in a report on Friday.

However, the report noted there were uncertainties related with the room to save operating spending, the efficiency of incentives for e-transactions and the height of the growth rate.

"The right execution of the budget depends on economic behaviors and conditions located largely outside the immediate control of fiscal authorities. Therefore, we recommend vigilance in order to correct for any possible divergence," the Office said.

"The 2020 draft budget plan is the first of the new government and reflects its intentions on fiscal policy for next year," the Office said. "Methodologically, it generally follows the structure of last year's draft budget plan, as it shows fiscal data directly on the basis of two scenarios: the base scenario and the scenario after interventions. The interventions of the second scenario have two forms: expansionary interventions worth 1.2 billion, and cutback interventions worth 1.9 billion," it said.

"If forecasts for 2019 are confirmed, then the estimated impact of those two interventions will be positive, achieving the 2020 goal," the report noted. The Office clarified that in real terms, the growth rate for 2020 is expected to be double compared than that of the Eurozone (2.8 pct from 1.4 pct, respectively) and significantly higher than forecasts made by the European Commission and the IMF (2.2 pct).

"This increase is attributed, according to the draft budget plan, to the positive impact of expansionary measures. This hypothesis is correct, in principle, at least on the demand section. However, the growth rate could be limited because of the counterbalancing interventions. Additional sources of risk for the growth rate come from a slowdown of the international economy and an escalation of geopolitical tension," the Office said.

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