New measures against accuracy by the Commission – What awaits Athens

By Tasos Dasopoulos

The joint European action on subsidies for energy tariffs is expected by the Ministry of Finance so that it can compile the new scenario for the economy in 2022, which will be adapted to the effects of the war in Ukraine.

Athens is waiting for the decisions of the European Energy through the revised toolbox that will be announced within the week, mainly for short-term subsidies of the energy tariffs, since the high prices of the energy products can negatively affect the fiscal course of the country.

This is because the situation for the polluting auction revenue account, which covers subsidies to households and businesses, is constantly changing. Based on the plan that existed until the end of 2021, it would cover part of the price increases until the end of the first quarter of the year, since then de-escalation of prices was expected. As tensions between Russia and Ukraine escalated, as prices rose further, the money in the bill from polluting revenues was estimated to be enough to cover subsidies for up to the third quarter of the year.

However, after the outbreak of war in Ukraine and the prices for gas and electricity returned to historically high levels, things changed for the third time. Now, with the new calculations, the prices of energy products are expected to remain close to current levels until the end of the year. What is worse is that with this new estimate, revenues from polluting auctions, if no central European solution is found, will be depleted within the second quarter of the year. From there, the subsidies will be taken over by the budget and therefore the debt and the deficit.

In order to avoid this problem, a proposal has been submitted to cover the subsidies from a common European fund, with the expenses that will be made not counting in the debt and the deficit.

Developments in the issue of subsidies will also determine the “perimeter”, ie the number of beneficiaries of the “accuracy check” of the allowance announced by the Prime Minister, which will be given near Easter to financially vulnerable households, to compensate for the increase in food prices and fuel.

This, given that the growth of 8.3% announced on Friday for 2021 the budgetary space for emergency interventions is limited. This is at a time when the Ministry of Finance expected – although they did not officially state it – that eventually the growth last year would be close to 9%.

The other issues

A second Greek request that is pending is the request to increase the subsidy of energy costs to the most energy-intensive companies. DGcom stopped this request, after deciding that such a thing would be a state subsidy, something that is contrary to Community regulations.

Along with the direction on the burning issue of subsidies, YPOIK expects the solutions that will be given by the Energy Committee, regarding the central European supply of energy products. This, in the sense that it should be clarified which of the proposals that have already been submitted and supported by Greece, will be adopted with the aim of energy efficiency at better prices, in a critical period such as the one we are going through.