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Economy

Greek Economy to Grow by 7.5% in 2021, Draft State Budget

ATHENS — Finance Minister Christos Staikouras and Alternate Minister Theodoros Skylakakis on Monday tabled to Parliament the draft plan for the 2021 state budget which envisages an economic growth rate of 7.5 pct for the next year, along with a series of measures to lower the tax and social insurance burden for enterprises with the aim to boost recovery and create new job positions.

The draft budget plan envisages a primary deficit of 1.0 pct in 2021.

More specifically, the draft budget plan envisages an 8.2 pct economic contraction this year and a 7.5 pct growth rate in 2021 to 185.215 billion euros from 170.721 billion in 2020. The primary deficit will reach 6.3 pct of GDP this year and 1.0 pct of GDP in 2021. The unemployment rate is projected to reach 18.6 pct in 2020, falling to 16.5 pct in 2021. Budget revenue is projected at 53.705 billion euros in 2021 from 50.147 billion this year, with tax revenue rising to 49.546 billion euros from 44.594 billion, respectively. Budget spending is project at 63.884 billion euros in 2021 from 68.528 billion this year.

Finance Minister Christos Staikouras, commenting on the draft budget plan said it was drafted during period in which the global economy and societies continued to be tested by the most serious health crisis of the last 100 years and the resulting worst annual global economic recession since the end of the World War II. "The 2021 state budget is drafted, unfortunately, under odd and extremely adverse conditions and in a state of serious uncertainty," he said, adding that this uncertainty forced European institutions to decided the extension of more flexible fiscal policy in 2021 to protect, as much as possible, the productive and social fiber from the impact of the pandemic. Staikouras said that EU funds safeguarded by the Greek government from the Recovery Fund and the React EU will add two percentage points to economic growth in the country in 2021, from 5.5 pct (base scenario) to 7.5 pct (final provision). Under the adverse scenario, however, economic growth will reach 4.5-5.0 pct in 2021.

Staikouras said that a provision for a dynamic economic recovery in 2021 is also based on measures to lower the tax and social insurance burden on enterprises to encourage job creation, such as lowering social insurance contributions by three points, abolishing a solidary contribution tax and hiring new workers without social insurance contributions for up to six months. The 2021 budget also envisages, for safety reasons, to maintain a capital buffer to deal any future needs.

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