The Finance Ministry is sending distress signals over the extended lockdown of retail commerce, as the cost to the economy and the budget is becoming increasingly unbearable.
“Every month that retail is closed about 0.7% of gross domestic product is added to the primary budget surplus,” a senior ministry official tells Kathimerini. “How much longer can this go on?”
January budget execution figures showed an excess of the deficit by 500 million euros. If one also counts the cost of the furloughs that will be compensated later, the overrun soars to about €1 billion, officials explain. This indeed comes to 0.7% of GDP, and that will be the case for February too.
Therefore, in just the first couple of months the year the deficit will have already been burdened by an extra 1.4% of GDP – from the deficit of 3.9% of GDP foreseen in the budget, it has already run up to 5.3%, unless something changes by the end of the year.
A similar knock is likely to come from tourism as well. The budget has been drafted on the assumption of tourism fetching 60% of the record revenues of 2019, while a more likely scenario now is for 40% of that, even if it is still too early to make any accurate estimates.
The concerns of ministry officials are focused on March and April. Original plans provided for the opening and closing of the market per fortnight in March and then a gradual reopening of food service as of April, though nothing is certain at this stage.
Officials note that the closing of retail commerce will even affect next year’s budget, as it is reflected on the reduction of future revenues.
The ministry now finds itself in the uncomfortable position of drafting a new midterm fiscal plan for the 2022-2025 period, as the European Commission has asked from all member states, just as no one is able to predict what will happen even in the following month.
The State’s General Accounting Office is considering the option of restricting itself to a baseline scenario, without any additional measures included.