ECONOMY

Remedies to keep economy on its feet

Gov’t looks to recovery fund, tourism, price controls on EU level to tackle effects of energy crisis

Remedies to keep economy on its feet

Given that the effects of the war will be great and that no one knows when the Russian invasion of Ukraine will end, the government is deploying all the tools at its disposal to tackle the energy and, by extension, economic crisis. 

The first weapon in the government’s arsenal was the disbursement on Friday of the first installment of 3.6 billion euros out of its allotted €30.5 billion from the NextGenerationEU recovery fund.

The funds are seen as a good start for the market to begin moving, with Prime Minister Kyriakos Mitsotakis saying that with this money “big projects begin,” while stressing that there will be actions that will specifically stimulate employment and reduce unemployment.

The second weapon is tourism. Its prospects this year were duly noted in his recent meeting with President Katerina Sakellaropoulou. 

In particular, Mitsotakis noted that “it seems that tourism will go very well” this year, stressing that it has not been “particularly affected by the developments,” which will allow for a much better year than the previous two.

Indeed, indications so far show that this summer Greek tourism may approach the levels of 2019. If this does turn out to be the case it will offer the economy a much needed respite. 

A third weapon for Greece would be for decisions to be taken on a European level for price controls. 

Mitsotakis raised the issue again on Friday during a teleconference with Valdis Dombrovskis, the European Commission’s executive vice president, noting that it is absolutely necessary for measures to be taken at the next summit to prop up productivity in all member-states and to bolster households that are now being battered by international price increases after the pandemic.

What is not lost on the government is that the national budget in any EU country cannot shoulder the burden created by the energy crisis and that therefore collective decisions are needed.

At the same time, it is also well aware that, at the moment, there is no room for either fiscal easing or additional aid.

With this in mind, the most realistic scenario is the enactment of strict price controls, in order to mitigate the effects of this crisis as much as possible.