ANALYSIS

Economic support measures cannot rely on state coffers

Economic support measures cannot rely on state coffers

Another 1.1 billion euros was added to the some 2.6 billion euros spent in recent months to support the Greek economy, households and businesses. It seems that this time an attempt was made to target the families in need, the business sectors that have been most affected and directly affect the general price level, and, finally, the manufacturing sector, where the cost of energy has always undermined its competitiveness and is now testing it further still. However, I think that this attempt has also been left in the middle.

There are two points that I want to make: First, these measures have neither solved nor could solve the problem in a way that measures at the European level could address it (such as changing the limit pricing model in the wholesale electricity market). We have to keep in mind that Greece is heavily indebted. Its bonds are in the “junk” category and, in the last two years, 43.3 billion euros was handed out with populist “generosity” to pretty much everyone. The bottom line is that the markets do not take kindly to a state that borrows only to hand out benefits without any criteria. At some point they will refuse to lend. And we have been there before.

Secondly, even now, there is no reasonably strict management of this aid in place. Many people who appear “poor” are just tax evaders with low taxable income who seem to enjoy a high standard of living. Obviously the government (and every government) knows this, but instead of resorting to a combination of checks to figure out who really needs the help, it closes its eyes and pretends that there is no problem. Besides, tax evaders and non-payers are the lucky ones in Greece – an old tradition which continues uninterrupted today.

In the new package of measures there is no special provision for those whose income is not just reduced but has been completely obliterated since they lost their jobs

However, one government omission and one contradiction seem interesting to me. In the new package of measures there is no reference to the unemployed, no special provision for those whose income is not just reduced but has been completely obliterated since they lost their jobs. The absence of some assistance in the country with the highest unemployment rate in Europe would normally come as a surprise.

This is not the case, nor has the main opposition been heard saying anything about it – perhaps it has forgotten it in the monotony of its general demand for the government to “give more money to more people.” And the announced increase of the minimum wage in May, which will affect the unemployment benefit, is not a satisfactory explanation. The increase has already been eroded by the wave of rising prices, and the meager unemployment benefits (which are given to perhaps 10% of the unemployed) have already lost much of their purchasing power.

But while there is no provision for the unemployed, the government has renewed its care for the lucky recipients of the (non-)repayable advances. I should remind readers that 8.3 billion euros of taxpayers’ money has been distributed to 700,000 businesses without criteria – to both healthy and zombie businesses that prosper due to tax and social security contribution evasion.

This aid was supposed to be returned in five years. However, the 6 billion euros has now been gifted – it will never be repaid. Some of it became bank deposits, luxury cars or real estate purchases. Now, with the kind care of the government, the remaining 2.3 billion euros will be returned, interest-free, in eight years! Therefore, about 150 million euros more will now be gifted by taxpayers to the lucky beneficiaries until the summer of 2030.

That’s all the taxpayers, including the unemployed, since they also pay indirect taxes. Another horizontal handout on top of those that have already been distributed and are being distributed – despite public pledges to the contrary.