NEWS

Prices, Covid are government’s top challenges

prices-covid-are-government-s-top-challenges

Prime Minister Kyriakos Mitsotakis considers that the biggest challenges for the rest of his term will be managing the current wave of the pandemic and rising inflation.

Privately, as well as publicly, Mitsotakis insists that elections will take place at the end of his four-year term, in July 2023.

Even though the center-right government has operated under the pandemic emergency for most of its time in power, at least 2020 and 2021 were years where the European Union relaxed the fiscal rules and the government spent in abundance to prop up individuals and businesses hit hard by the health crisis.

But even with the coronavirus still much present, the EU has decided that a kind of fiscal normalcy will return from 2023; for Greece, by far the most heavily indebted EU member, this means returning to primary budget surpluses that year. And the 2022 budget must be nearly balanced, too, and this is reflected in the draft tabled in Parliament on Friday.

In any case, the government can hardly afford to spend the sums it did in the previous two years in support of all kinds to prop up the economy, which, in any case, is booming beyond expectations.

Next year is seen as a crash test that will determine the country’s credibility with its partners, its creditors and the markets, and will greatly affect negotiations with the EU for smaller, and more realistic, budget surpluses.

Greece wants to be an active negotiator in the revision of Stability and Growth Pact rules and not merely follow other countries’ lead. 

Mitsotakis has also forged a close partnership with his Italian counterpart, Mario Draghi, who, as president of the European Central Bank from 2011 to 2019, was credited by many as the “savior of the euro” during the European debt crisis that hit Greece the hardest.