Nothing is set in stone yet. That was the response of Alternate Finance Minister Thodoros Skylakakis on Open TV on Monday to a question over whether there will be a handout given to the most vulnerable households in Greece before Easter. That had been the impression from the references of the prime minister and the finance minister regarding targeted measures against the effects of inflation.
Skylakakis explained that it is developments on the Ukrainian front and the macroeconomic scenario the ministry will draft by April 30 that will determine whether there will be handouts and, if so, how much. As he said, targeted measures will certainly be taken, but only if there is sufficient fiscal space: “We will need to make our calculations first,” Skylakakis stated.
He made it clear that the State General Accounting Office has not yet calculated how much such a benefit would cost, which demonstrates that it is too early to speculate at this stage.
The scenarios concerning measures against the price hikes have long been circulating and were recently fanned by the statements of government officials. However, the government appears to be having second thoughts after the soaring of the country’s borrowing costs, which constituted a warning sign from the markets. Therefore, one after another, government officials have been assuring that the policy to be followed will be sensible, without putting at risk the target for a primary budget deficit of 1.4% of gross domestic product.
In that context, Skylakakis noted on Monday that decisions will be made in due course, after assessing the crisis in Ukraine and the energy rates. He said it is likely the state budget will have to support electricity consumers, currently subsidized by pollution rights. In that case the cost of electricity may eat into any fiscal leeway created.
He did estimate, however, that power rates will recede during the summer. He also assured that the second increase to the minimum salary, after the 2% hike at the start of 2022, “will be considerable.”