The €500 million amount resulted from negotiations between Athens and the European Commission, designed to create additional fiscal flexibility for benefits to be announced at the Thessaloniki International Fair (TIF) in September, which are set for implementation in 2026. This arrangement was made possible by excluding a portion of defense spending from the calculations used to determine Greece’s compliance with its annual budget surplus targets.
This adjustment is evidenced in the tables included in the European Commission’s country report on Greece, as part of the European Semester, and has been confirmed by the Ministry of National Economy and Finance.
Under this agreement, Greece and Poland will use 2024 as the benchmark year for assessing increases in military spending, rather than the 2021 baseline that applies to other EU countries. The year 2021 saw unusually high defense expenditures for Greece due to tensions over migration at the Evros border with Turkey. Using that year as a reference would have distorted comparisons and adversely affected Greece, prompting the exception for 2024.
Finance Minister Kyriakos Pierrakakis commented on this development:
“Our country will have the capacity to allocate over €500 million more for 2026. It’s particularly significant that our partners have agreed to designate 2024 as the reference year specifically for Greece, thus providing us with additional fiscal space.”
This half-billion euro allocation will contribute to the anticipated increase in government spending margins expected later this year. It will finance permanent relief measures and tax reductions to be announced by the Prime Minister prior to the submission of the 2026 draft budget in November.
Ask me anything
Explore related questions
