ECONOMY

Staikouras checks expectations regarding new social handouts

staikouras-checks-expectations-regarding-new-social-handouts

The Finance Ministry is dampening expectations of a new round of social handouts, in the form of a Christmas bonus, on top of that issued to pensioners last May.

Ministry sources say the information about a primary surplus overrun of 1 billion euros is too optimistic. Even the 346 million euros recorded in the draft budget should not be taken for granted, they say, adding that this is a small amount anyway and could not be distributed in its entirety as a social dividend as a part of it will have to go toward creating a safety cushion. They suggest that an amount of only 100-300 million euros could be handed out.

The same sources note that there are also obligations that must be covered, such as payments to state corporations and overdue arrears, which leaves little scope for handouts. They add that there are also some 2019 payments that aren’t a part of the original budget. These include the 138-million-euro reduction of the corporate tax deposit, the reduction of the Single Property Tax (ENFIA) and the 68-million-euro prepayment of the heating oil subsidy.

Kathimerini understands that Finance Minister Christos Staikouras prefers the creation of a safety cushion from the budget overrun, for extraordinary needs such as the retroactive payments due to pensioners.

Speaking on Skai TV last week, Staikouras even said that it is not certain there will be any primary surplus overrun, adding that “we ought to be very careful in the execution of the budget.” He went on to say he is an avid supporter of fiscal discipline and that, in any case, the decision will be made by the prime minister after the November fiscal data come out. He added that this was his message to his cabinet colleagues at last Thursday’s meeting.

The policy of the “social dividend,” which the previous government applied systematically, is not at all to the creditors’ liking, even if fiscal discipline is not at stake, as they would prefer to see extra resources directed toward funding growth. Even so, due to the expectations that have built up and if the budget continues on a positive course, pressure is likely to mount for a small handout to financially weaker members of society, as Prime Minister Kyriakos Mitsotakis himself has stated.