Where is the Ministry of Finance looking for financial space for support measures?

By Tasos Dasopoulos

The new rally in the price of oil triggered by the EU political agreement on the embargo on Russian oil, also increases in Greece the pressure for measures that will mitigate the increases in liquid fuels.

However, the financial staff is working on the horizon until the end of the month before finalizing a new package of measures, which reportedly will have a new philosophy compared to those adopted so far.

At present, the officials of YPOIK are cooperating with the Ministry of Energy in order to implement the retrospective intervention for the electricity tariffs, which will cost 3.2 billion euros by the end of the year. These days the arrangements are made so that by the middle of the month the platform is opened for the retroactive payment of 60% of the charges (excluding the discounts of the providers and the subsidies of the tariffs) that the consumers had, from December 2021. implementation of the measure in June and the indirect abolition of the adjustment clause in July are considered to largely decompress the burdens that Greek households suffer.

The conditions

The next step in terms of support measures will depend on many factors. The first is that tax revenues have the same good course that led to exceeding the budget target by 1.7 billion euros at the end of April. At the moment the messages from the income until the second 10 days of May are positive.

The second factor is the course of tourism that will give a smooth course of increased revenue almost until the end of the year.

The third factor will be the budgetary space that will have to be created by the support measures that have already been announced and will be implemented. In other words, for there to be room for new measures, those that are already running should cost less than originally estimated. That is, the cost of intervening in electricity tariffs will eventually be less than 3.2 billion euros. This is because the financial staff does not want to change for the second time the target for the primary deficit, which increased to 2% from 1.4% of GDP targeted in the 2022 budget, just to include the already known support measures.

Another condition that must be met is that new and de facto expensive lending should not be done to implement new support measures.

Possible measures

However, with regard to possible additional measures, given that the issue of electricity price increases will be resolved, the aim will be to mitigate increases in liquid fuels. Particularly:

– The fuel subsidy will be extended in another form. It will again be a subsidy, which as it will be monthly and can be fluctuated depending on price fluctuations to absorb in each case part of the price increases.

– The special subsidy on diesel by 15 minutes at the refinery price will get a second extension (it has already been extended for May and June), maybe until the end of the year, depending on the course of international oil prices.

The biggest problem is the measure that should be chosen to help the financially weakest. In the first phase, this was done with the check of accuracy, which benefited about 1.6 million taxpayers. The co-responsible Ministries of Finance and Labor are considering a new measure more effective and possibly with a renewable monthly amount until the end of the year.