Targeted handouts from April

The government is pinning its hopes on the reopening of retail commerce in the following weeks in order to tackle the growing problems that enterprises and households are facing and for the state budget to return to its planned course after straying in the first couple of months of the year.

According to a top Finance Ministry official, the weekly cost of the lockdown in the retail sector averages some 500 million euros; this fluctuates depending on the features of each month: Yet even in a month like February, when the takings of the state and retail commerce are usually low, the cost still comes to this unbearable €500 million per week.

The cost incorporates the special-purpose compensation for workers whose contracts have been suspended, the social security contributions the state covers, the suspension of tax obligations that are estimated at €70 million per month, the reduction of rents – another €70 million every month – and the extraordinary spending recently required by ministries such as those of National Defense, Health and Citizens’ Protection.

The total cost of €2 billion per month is exceptionally difficult for the state to cover. A top ministry source says: “Each restriction on economic activity has its cost for the real economy and public finances. The stricter the restrictions and the longer they last, the more painful the effects are on society and the economy.” This serves to illustrate his and others’ worries, given that it is hard to predict even what will happen next month. He goes on to note that the support measures in the form of handouts will have to be reduced from now on, as they have a dramatic impact on the budget deficit – a fundamental that needs to remain contained.

In this context the ministry has prepared support measures of €2 billion for February and March, while after March any measures will be absolutely targeted. The same source stresses there will be no eighth phase of the cheap state loans program, or any other horizontal handouts.