Seeking the right mix of support measures

The government is seeking to introduce support measures to ensure jobs will not be lost due to the fresh surge in the coronavirus pandemic – just as the economy was on the mend – to protect businesses from high energy costs, avert an extensive impact of inflation in early 2022, and to make sure that the country will not be counting new business closures after the end of the fifth wave of the health crisis.

All this will need to happen at the lowest fiscal cost possible, as Greece’s national debt has soared to 350 billion euros and 2022 was already going to have a primary deficit; the government also has to rein in its budget deficit ahead of the tough negotiations regarding Greece’s emergence from the enhanced surveillance and the revision of the Stability Pact of the European Union.

The various and often conflicting objectives amid the uncertainty that the onset of the Omicron variant is generating and the pressure from the energy and consumer price hikes are creating a conundrum. 

At the start of 2022 the Finance Ministry will not enjoy the fiscal space it had in early 2020, before the outbreak of the pandemic, or in 2021, when it was clear there would be no major fiscal restraints required from the European Union: The new year will start with several targets even though the budget can still close with a deficit.

The two main goals are the country’s credit rating recapturing investment grade as early as possible, and exiting the post-bailout monitoring on the best possible terms. In that context the ministry has concluded that a new set of key rules is necessary regarding support measures for households and businesses.

The first rule is that each measure will be announced once a certain need has been determined, and not in advance, as was the case in previous waves of the pandemic. The priority now lies in safeguarding jobs, which is why the furlough system will immediately resume.

Secondly, relief interventions both concerning the energy and the health crisis will be absolutely targeted, with exhaustive probing of the recipients in real need.

Finally, the measures will specifically target the protection of companies from closure in the face of higher prices and a decline in demand due to the pandemic.