Staikouras: Uncertainty has multiplied but there is fiscal flexibility

We look forward to the EU initiatives, which will create more fiscal space to shape the network of support measures, says Christos Staikouras.

Greece awaits the initiatives of the European Commission, which can create more fiscal space, to, together with a better picture of the course of the energy crisis, the war in Ukraine and the course of income, shape the network of support measures . Specifically, this was stated by the Minister of Finance, Christos Staikouras, who recommended calm and prudence, saying that it will take days, perhaps weeks, to have a clearer picture of the situation.

There is great uncertainty, stresses Christos Staikouras

Speaking to the radio station “Parapolitika”, the minister spoke of a change in the EU’s position in the last Ecofin, regarding the exemption or special treatment from the financial point of view of defense spending. She said this, if done, gives the country plenty of room to support households and businesses. She also said that the European position is changing because of the Greek request for additional support and energy-intensive companies, which has been denied so far. She added that Greece is calling for a European fund that will operate on fiscal neutral terms to support households and businesses with it. According to her, she said, with the new coverage cost forecasts for homes and businesses, the quantities of pollutants will be depleted well before the third quarter of 2022 that was originally forecast and the cost, with the current data, will have to be covered. is the budget.

According to Staikouras, “uncertainty has multiplied” and the government’s policy should focus on specific support, but for much longer than expected and for a much more acute problem. “There is fiscal flexibility,” he said, “but we all need to know that this proper safety net built because of the pandemic has led to a primary deficit of more than 6% of GDP, or €12 billion.” He pointed out, at the same time, that “at the moment there is a significant increase in the cost of borrowing, and we don’t know how it will evolve. “So the data is not the same as in 2020.” While the debt has increased due to the pandemic. “So any flexibility that is given should be used wisely, calm is required,” he stressed.

Providing emergency assistance in March, says Christos Staikouras

Mr. Staikouras reiterated the provision of emergency support in March, while when asked about the possibility of increasing installments in the “reimbursable advance”, he replied that “I have nothing to add”. I do not have to cultivate additional expectations, but it is something that we will take into account in the coming weeks.” He clarified that “we have a war. “The citizens will lose.” According to the minister, “the crucial point is how the execution of the 2022 and what will be the development of the war, to determine exactly the amount available and where the disbursements will be made.

As he mentioned, since the crisis the course of the GDP seems to be negatively affected by one percentage point, while there will be effects of the prices of cereals and some metals. He estimated that gas and energy prices will remain at current high levels throughout 2022, while inflation in Europe will exceed 5%. However, he said that the box is such that they can face the consequences of this period. He added that the need for further acceleration of the Recovery Fund is becoming more urgent, which is why more strategic investments were made a few days ago.

source: iefi merida