Gov’t subsidies to continue

Gov’t subsidies to continue

The government is preparing a new package of support measures in May to combat the high cost of energy, and all instruments are on the table, including the imposition of a ceiling on the wholesale price of electricity.

Finance Minister Christos Staikouras also told Skai TV on Thursday that the fuel subsidy will likely continue in the coming period, but the way that will happen will depend on the needs, the fiscal leeway and the priorities the prime minister will set, he explained.

The government appears to be making its plans on the basis of a prolonged conflict in Ukraine, as it intends to extend its interventions; that is also evident in the supplementary budget and its new, more adverse long-term scenario. The latter will be included in the Stability Program Athens will submit to the European Commission by April 30, based on a growth rate of 3% for 2022, Staikouras revealed on Thursday, against the budget’s projection for 4.5%. That amounts to a gross domestic product loss of some 3 billion euros due to the war.

The minister pointed out that the government forecast is more conservative than that of the International Monetary Fund (3.5%) and the Bank of Greece (3.8%). The new projection on inflation will also be more negative, taking it to more than 5%, Staikouras claimed, while the IMF has forecast 4.5% and the BoG 5.2%.

State support “will obviously continue into May, but we will see what form it will take in relation to the resilience of the budget and what we ought to do in the coming period.” He reiterated that in order to retain the reduced value-added tax rate on food service and transport over the second half of the year, another €250 million will be required. Also next year the government will require another €2 billion to extend the temporary reduction of social security contributions and the suspension of the solidarity levy and expand it to concern also the public sector and pensioners.

Staikouras did not rule out a VAT reduction on food, but said caution and prioritizing are required.

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