Yiannis Economou: We have a plan for the economy despite multiple crises

Greek Greece economy finance euros money inflation commission labour ministry interest rate economou

Government spokesman Yiannis Economou said in a Twitter post on Wednesday that despite multiple crises, “the first payment request under the National Recovery and Resilience Plan is positive.”

“The preliminary assessment for the first payment request under the National Recovery and Resilience Plan is positive,” he said.

In the same post, Economou pointed out: “The disbursement of the installment will take place in April. With a plan, impetus is given to the country’s economy even in the midst of multiple crises.”

However, other reports suggest that Russian invasion of Ukraine reversed the financial landscape in Greece and violently interrupted the return of the Greek economy to normality after the pandemic.

New hikes are expected in the already high energy rates, as well as in the prices of food and raw materials, and any hopes of their containment have now vanished for the next few months, thereby testing the stamina of households, corporations and the state budget.

It is impossible to make any safe predictions at this stage, given the fluidity of the situation.

However, it can be taken for granted that the high inflation will have a negative effect on growth, make reducing the deficit to the level the budget provides for more difficult, as the new rates rise, mainly in energy, and lead to an extension of state subsidies.

Although energy was not included in the sanctions slapped on Russia last Thursday, leading to a decline in oil rates on Friday, the problems facing the economy and the national budget are inevitable.

Finance Ministry officials said that what concerned them last week was the continuation and possible increase of power bill subsidies, and the support of vulnerable households, “if there is any fiscal space.”

These targets will be hard to meet, given that the budget was already at its limits before the outbreak of war in Eastern Europe, hence the withdrawal of scenarios about a cut to value-added tax and fuel consumption tax rates.

Now needs are growing further and there are two main solutions: Either raise the primary deficit from 1.4% of gross domestic product that the budget provides for, or have the European Union intervene and support households through resources of its own.

The government is further considering targeted measures for companies hurt by the soaring energy costs.

The Finance Ministry and the tax authorities are already preparing the necessary mechanisms for the support of businesses, with subsidies differing according to sector.

READ MORE: US closes airspace to all Russian aircraft. “He [Putin] has no idea what’s coming,” says Biden at the State of the Union.