Support package for borrowers, professionals and retirees

to Tassos Dasopoulos

The Finance Ministry has prepared a package of two emergency and two permanent measures, totaling €2 billion, for 2023, depending on the needs of the energy crisis, fiscal space and, of course, the time of crisis. The election.

In the first phase, exceptional interventions are expected to be announced and implemented from the beginning of 2023 with the aim of mitigating the accuracy on the shelf and the risk of a new wave of bad loans due to rising inflation and rising interest rates. In April, with the final GDP numbers for 2022 and the extra room tax revenue will provide, consideration is being given to closing the backlog of auxiliary staff and possibly the first step in reducing special interest charges.

Currently, measures to support the “new generation” are being completed so that families and the economy in general can withstand the pressure exerted by high inflation that leads to a decrease in disposable income but also an increase in the cost of money, which is expected to intensify from the beginning of next year.

As has been the case since the beginning of the energy crisis, measures will be flexible and adaptive to circumstances. At current prices for gas and crude oil, it is estimated that no further subsidies are needed for electricity or fuel. Even the recorded increase in the price of natural gas in the past few days was described as temporary and linked to the price ceiling of 275 euros per megawatt hour proposed by the authority, which producers rushed to take advantage of.

With this in mind, the two planned interventions are about directly strengthening the community in the direction of mitigating the effects of punctuality.

Monthly food passage

The first is to reduce the “accuracy to the shelf”. The first effort undertaken, the Family Basket, is already recording positive results and will soon be expanded to include Christmas foods as well as foods with special categories related to eg. Diabetics. However, responsible officials at the Ministry of Finance acknowledge that the rise in prices of basic foods will continue. In the direction of a more substantial treatment of revaluations, the Finance Ministry wants accuracy checks to continue on a monthly basis for at least the first quarter of next year. That is, after the €250 subsidy announced by the Prime Minister at TIF that will be given in December to approximately 2.3 million economically vulnerable beneficiaries for a €50 monthly voucher (there is also a €100 offer) which in conjunction with the “household basket” It will reduce the cost of foodstuffs, especially for the economically vulnerable groups.

Mortgage installment support

The second intervention concerns the “immunization” of 80%-90% of variable rate mortgages from high interest rates while supporting the interest rate above the limit that is agreed upon with the commercial banks. At the same time, the Ministry of Finance wants to put pressure on deposits and loans for the real economy to reap the benefits.

The funds to be granted for these two interventions will depend in principle on the use of the budget reserve of $1 billion, especially for electricity subsidies. The Ministry of Finance officially admits that with today’s prices, electricity subsidies will be covered under the rights, but also the extraordinary taxes expected by the oil companies (they are expected to bring 400 million euros in additional revenue), more than half of the special reserve, that is, about 600 million, It will not be used. In fact, it is estimated that unless we have some very negative energy developments, including taxation of excess profits of energy producers, the entire reserve will be available for support measures.

permanent measures

In April, the Ministry of Finance will have official data from ELSTAT on GDP growth for 2022, which is expected to change the landscape. Relevant officials at the Ministry of Finance acknowledge that the recent amendment to growth from 5.3% to 5.6%, which was included in the final draft of the budget, will be conservative and growth will exceed 6%. The higher growth will support the revenue stream in the first quarter of the year as well. With a positive impact of 2 billion from the last quarter of the year, the additional fiscal space created is estimated at an additional 1 billion, an amount that could be used for new positive interventions depending on when the election is announced.

If elections are held in the summer (which is likely), the government’s priority is to close the issue of reactionary measures in aid and “gifts” which will have different costs for 2023 depending on the decisions to be made. You must decide conclusively whether payment will be made only to those who have taken legal action or to all beneficiaries. In the first case, the cost will be 600 million euros, and in the second 2.4 billion euros. In the second phase, it must be decided whether to present the retrospectives in one or more installments. However, in the European Commission’s latest report on Greece’s first assessment outside the scope of enhanced supervision, the issue of outstanding conclusions is referred to as a financial risk at an undetermined cost.

The second measure on the government’s agenda, but so far there have been no suitable conditions for its implementation, is the reduction or abolition of demonstration fees, which currently cost about 600 million euros. If we do not have an exacerbation of the crisis in the second quarter of next year, it is possible that there will be a reduction or even a complete abolition of fees next year. The specific and disproportionate burden on businesses and freelancers is a legacy of the memorandums and their application has been criticized by the European Commission, which considers them an obstacle to the healthy development of entrepreneurship.