Staikouras: No touching the cash buffer

Staikouras: No touching the cash buffer

The government will not touch the country’s cash buffer and will announce fresh support measures next month, Finance Minister Christos Staikouras said on Friday, adding that the economy is expected to rebound considerably in the year’s second half, moderating its annual contraction for 2020 to 3-4 percent.

Speaking on Alpha TV, Staikouras explained that “there is no issue of public service cuts according to the baseline scenario we are running” and stressed: “We are not planning to lay a hand on the safety cushion, that 15.7 billion euros, based on the baseline scenario that is about the coming period. We intend to repeat in May the measures we have taken [for March and April] without making any use of the cash buffer.”

He did note however that the longer the health crisis lasts, “the greater the economic problems will be. Therefore we will need to utilize more weapons, as well as reserving some fuel.”

The minister spoke of a recession of 3-4 percent for the whole of 2020, against a previous estimate for a contraction of between 1 and 3 percent: “With the current figures the country appears able to recover significantly in the second half, to offset some of the recession,” he said. He further explained that his 3-4 percent forecast is without the benefit of the measures, “therefore I believe that the more correctly structured the measures are and the better they are distributed in the coming period, taking also into account the post-coronavirus era, the faster we will emerge from the crisis and be led toward high and sustainable growth.”

As for the tax breaks planned before the onset of the epidemic, the finance minister said: “Our policy regarding the reduction of direct and indirect taxes remains unchanged. When the situation reverts to normal, that policy will be implemented.”

Staikouras finally stated he was “realistically optimistic” that Tuesday’s Eurogroup will issue a “message of determination and solidarity” and that a positive combination of measures will come out of it.

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