The Ministry of Finance is focusing its attention on the earnings from the Central Bank profits, the infamous ANFA-SMP, not only to achieve a 2.8% growth-rate in 2020, but also to surpass it. The debate on changing profits will start right after New Year’s Eve and includes a technical discussion with the Europeans. This is essentially the implementation of the Eurogroup decision of June 2018 on the possibility of using these revenues for investment financing.
Before we get to the final decisions on any changes of use expected around March along with the Report on the 5th Enhanced Surveillance Report, we need to see how the above can affect the Public Investment Program.
A study by the Center for Planning and Economic Research (CPER) found that the impact on GDP after an external disruption to public investment is positive, with the multiplier equaling 0.48 after four quarters. However, adding to the above equation the economic crisis variable, it is found that the multiplier is larger and climbs at 1.36 after four quarters. This means that public investment spending during such challenging times has a positive multiplier effect on GDP. In this case, if one applied this multiplier to the lost expenditure of the Public Investment Program, it would result in a loss of up to 9 billion euros of GDP.
Sources from the Ministry of Finance pointed out, however, that despite the obvious political difficulties – as demonstrated by the Germans’ resistance during the November and December Eurogroup- technical difficulties arise in the process of changing the use of the ANFA-SMPs.
The main difficulty lies in the fact that whatever is received from the Eurosystem profits and is directed to investments will have to be spent within the same year. What this means practically is that investments, which must be agreed with the Europeans anyway, must be mature so that they can be realized without delay. /ibna