Budget for recovery and increased revenues in 2022

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The state budget, which was officially submitted to Parliament yesterday, is based on a full recovery of economic activity that will cover the losses of GDP in 2020.

According to the macroeconomic figures mentioned in the budget, growth of 5.5% is projected this year and growth of the economy at a rate of 4% in 2022, leaving behind the negative growth rate of 2020.

The new budget is based on estimates to reduce spending and improve the inflow of government revenue, so that the budget deficit is reduced to 1.1% of GDP in 2022 from 5% in 2021. At the same time, a primary surplus of 0.7% is expected in 2022, from a deficit of 3% in 2021.

In terms of public debt, it is estimated that it will decrease to 107.7% in 2021 and to 100.9% in 2022, falling below 100% from 2023 onwards.

The estimates put the stigma of trying to get the economy back on track, leaving behind most of the negative effects of the pandemic.

During the handing over of the budget to the Speaker of the Parliament Annita Dimitriou, the Minister of Finance Konstantinos Petridis spoke yesterday about a “fiscal correction” brought about by the budget, which, as he stressed, is interwoven with the Recovery and Sustainability Plan.

“We have to protect public finances, yes, the 2022 budget is expansive, but we need this fiscal correction, not even to protect public finances, which are what gave us the time of the great crisis, the opportunity and the opportunity “We must support with all our forces, the economy and the workers, so that the collapse does not occur at the time of the pandemic,” he said.

In 2022 growth is estimated at 4% while debt at 100.9% and in 2023 at 3.4% and 96.9% respectively.

The unemployment rate is expected to begin to decrease significantly from 2022 to 6.5% from 7.5% in 2021 while a reduction is forecast for the coming years, at 6% in 2023 and 5.2% in 2024.

The budget deficit is expected to reach 5% for this year (€ 1129.8 million) from a deficit of 5.7% in 2020 (€ 1193.2 million) and a surplus of 1.5% in 2019 (€ 326.3 million). ) while significantly reduced deficits are expected in the coming years, at 1.1% of GDP in 2022 (268.5 million) and 0.5% in 2023 (116.7 million).

The primary deficit is projected at 3% in 2020 while in 2022 a surplus of 0.7% is expected.

Revenue increase of € 258 million

In terms of revenues in 2022, excluding financial flows are expected to amount to € 6,731 million compared to revised revenues of € 6,473 million in 2020, ie an increase of 4% is projected.

The most important categories of revenues are the direct and indirect taxes that in total for 2022 are budgeted at € 5,193.3 million and constitute approximately 82% of the total revenues.

The remaining 18% of revenues is budgeted at € 1,132 million and relates to non-tax revenues such as sales of goods and services, rents, royalties and transfers / sponsorships.

Revenues from direct taxation in 2022 are projected in absolute numbers, to reach € 2,130 million compared to revised revenues of € 2,014 million in 2021. That is, an increase of about 6% is expected.

Revenues from indirect taxation in 2022 are projected in absolute numbers, at € 3,063 million compared to revised revenues of € 3,234 million in 2021 and therefore a reduction of 5% is expected.

Non-tax revenues are projected to increase to € 1,132 million in 2022, compared to revised revenues of € 821 million in 2021, ie an increase of approximately 38% is expected.

Reduction of € 72 million in total expenditures

Total expenditures, excluding loan repayments, are expected to show a slight decrease compared to the previous year and amount to € 8,407.8 million in 2022, compared to € 8,479.4 million in 2021.

Staff costs, including pensions and tips, are estimated to increase by approximately 3% to € 3,044 million (2022) compared to € 2,961 million (2021). The increase is mainly due to the payment of ATA, surcharges and the increase in employment.

Operating expenses are projected to increase by approximately 8% in 2022 to € 972 million compared to € 899 million in 2021.

Transfer payments consist mainly of social benefits, sponsorships to public and private law bodies and local authorities, as well as contributions to the Social Security Funds, the GESS and the EU budget.

In 2022, the budget for the above category is projected to decrease by approximately 8% and be reduced to € 3,049 million compared to € 3,332 million in 2021. The reductions in transfer payments are mainly due to the reductions in the provisions for dealing with of the pandemic.

Expenditures for servicing the public debt (interest) show a decrease of 13% for 2022 and specifically are estimated at € 458.2 million compared to € 529.5 million in 2021.

10% increase in development costs

The development expenditures of the state budget for 2022 show an increase of 10%.

According to the state budget, the development expenses concern projects under construction, co-financed projects, trainings, sponsorships in educational institutions, fixed assets, etc.

It is estimated that they will reach approximately € 1,135 million compared to € 1,032 million in 2021.

According to the Ministry of Finance, the increase is observed due to the start of the implementation of major development projects including road, construction and other projects, as well as due to the promotion of projects included in the Recovery and Reconstruction Plan.

It is noted that the provision for the co-financed projects, for which the managing authority is DG EPSA, continues to be included in the consolidated line of DG EPSA for greater flexibility and to achieve the greatest possible absorption of European funds.

For the other co-financed projects concerning the Rural Development Program, the Internal Security Funds, as well as various Competitive Programs, the relevant provisions are included in the competent ministries.

According to the data included in the state budget, the total revenues of the General Government will amount to € 9691.9 million and the total expenditures of the General Government to € 9960.4 million.

The total expenditure of the state budget for 2022 is estimated at € 10457.2 million and is reduced by 4.1% compared to 2021.

Source: https://www.stockwatch.com.cy/

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