By Tasos Dasopoulos
Strengthening the network of measures against accuracy is proving a difficult exercise, since the margins are very limited in relation to 2020 and 2021, both fiscally and in cash.
Given that high inflation will be with us at least for the first half of the year, the Ministry of Finance is running and writing different scenarios, with mitigation measures which in any case cost a lot.
Zero repayment of the advance will cost € 3 billion, estimated at 2022. A new haircut on the repayment portion will reduce revenue by around € 1 billion. depending on the period chosen to be implemented, it will cost from 400 to 800 million euros.
The possibility of giving an allowance to the financially vulnerable as compensation for the wave of accuracy has also been considered. And this measure is estimated that, depending on the beneficiaries, will need from 400 to 900 million euros.
However, only the electricity and gas subsidy is financed by revenues from non-budgeted pollution auctions. And this account has specific limits since it finances the country’s energy transition.
If ELSTAT announces on March 4, together with the development for the GDP of the 4th quarter, growth of more than 9% for the whole of 2021, an additional fiscal space of over € 1 billion will be certified. From this margin, 335 million euros have already been financed. the reduction of ENFIA, however it is clear that the rest will not be enough to cover all the measures under consideration today. Therefore, it must be chosen what and for how long it will be implemented, in order to have the maximum possible efficiency at the lowest possible cost.
At the same time, YPOIK has to face two more challenges. The first concerns the need to reduce the primary deficit, amounting to around € 10 billion, by the end of the year in order to meet the target for a return to primary surplus by 2023. In fact, this target is under constant monitoring by the Commission , since Greece is a heavily indebted state and will have to prove that the increase in deficit and debt in 2020 was solely due to the pandemic.
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Rising bond yields are another headache for the financial staff. This is because, as the reaction of the markets has shown since the beginning of the year, the cheap borrowing that financed most of the measures of 43.8 billion euros in the two years 2020-2021, is ending.
As a “cushion” in the market pressures, Greece still has a huge cash reserve, which is currently approaching € 37-38 billion. This reserve will decrease next month, when 7.1 billion euros are expected to be allocated for repayment. of the remaining 1.8 billion euros from IMF loans and the double installment of 5.3 billion euros for transnational loans taken by Greece, entering the first memorandum. After these payments, the cash will fall close to 31 billion.
However, given that the strategy of the Ministry of Finance is to maintain more than € 30 billion and the only alternative is to borrow from the markets, even at higher interest rates, in addition to the budget, the cash part will also face difficulties to cover new measures to be implemented.
Source: Capital
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