The government faces a difficult "puzzle" as it works to finalize the new package of support measures for economically vulnerable citizens and draft the 2027 budget, as indicated in the circular from the Ministry of National Economy and Finance (YPETHO) on the 2027–2030 multiannual fiscal planning.
The establishment of spending caps by the Commission, and full digital monitoring through the govERP system, significantly narrow the scope for fiscal maneuvering and, by extension, the scope of the government’s “package” in an election year such as 2027.
The big picture that will dominate the next four years is outlined in the Ministry of Finance’s circular on fiscal planning through 2030, the main thrust of which is to control the rate of growth in public spending.
All public sector entities funded by the state budget must submit their spending plans to the General Accounting Office (GAO) no later than July 31, 2026, with the stipulation that: any new needs that arise will be covered exclusively through internal reallocations.
Fiscal Rules
Based on the new fiscal rules and the guidelines of the Medium-Term Fiscal and Structural Plan (2025–2028) and the Expenditure Plan, social spending is subject to a strictly defined framework, as the new European rule on ceilings for net primary expenditure is introduced.
Total primary expenditures are projected to grow at annual rates of around 3% to 3.6% for the years 2026–2029, and because the nominal increase is in many cases lower than current inflationary pressures, social benefits will show marginal or even negative changes in real terms.
The government’s planning for the next four years regarding the critical (in terms of social benefits) category of transfers to households and businesses is revealing.
Positive changes are marginal for the 2027–2029 period, while in 2030 the trend turns negative.
According to forecasts: from €35.788 billion (+0.17% in 2027), they will reach €36.385 billion in 2029 (+€381 million or +1.06%), while in 2030 they will reach €36.377 billion, declining both in absolute terms (€7.8 million) and as a percentage (0.02%).
The total increase over the period under review is limited to just €648.5 million, or approximately 1.8%, reflecting the limited scope for expanding social spending in the new fiscal environment. This trend indicates that the additional benefits announced each year will need to be financed either by revenue overperformance, by reallocating resources within the budget, or by spending cuts.
Digital audits
The economic team estimates that a significant portion of the additional fiscal space in the coming years will come from the permanent increase in tax revenues, as a result of the expansion of electronic transactions and the implementation of new digital tools to combat tax evasion. These include the digital customer registry, the digital shipping manifest, the expansion of the digital work card to the hospitality sector, and the new audit mechanisms of the Independent Authority for Public Revenue (IAPR) that utilize artificial intelligence applications to identify suspicious transactions and tax discrepancies.
It is worth noting that “transfers” include: pensions and other social benefits, allowances (child, disability, housing, etc.), grants to hospitals, social security funds, and other general government agencies, subsidies and aid to businesses, as well as payments to international organizations and the European Union.
In any case, social benefits are declining by sector in terms of GDP as the economy grows, while the trend in inflation must also be taken into account.
Under current conditions, however, the government has not yet secured even €1 billion for the announcements made at the Thessaloniki International Fair, which will mainly concern the 2027 election year.
Macroeconomic Forecasts
It should be noted that according to the revised forecasts of the Ministry of Economy and Finance, which are in line with the recent estimates of the European Commission and the Bank of Greece, this year’s growth rate will decline to 1.8%–2% (from the initial optimistic forecast of 2.4%) due to the new energy crisis.
Inflation will rise, closing out the current year at 3.7%–3.8% (compared to an initial estimate of a decline to 2.2%).
In fact, “energy” inflation in Greece is expected to jump to 11.1%, broadly affecting goods prices and increasing the cost of living.
In the Inflation Bulletin released yesterday, the Bank of Greece forecasts that the General Consumer Price Index in Greece will rise to 3.8% in 2026 and to 3% in the Eurozone, driven mainly by the recent shock in energy prices.
In 2027, headline inflation is expected to slow significantly in both Greece and the Eurozone (to 2.6% and 2.3%, respectively), as pressure from energy commodity prices eases.
It should be noted that the Harmonized Index of Consumer Prices rose significantly in May to 3.2% in the eurozone (preliminary estimate) and to 4.9% in Greece.