Inflation clouding 2023 budget

Finance Minister Christos Staikouras called on bank managers during their meeting last Thursday to exhaust their margins to raise deposit rates, not only to improve depositors’ incomes, but also to provide an incentive for deposit growth and contain consumption and inflation.

Inflation is at the back of the ministry’s mind in every initiative, and rightly so. Together with the election and the potential difficulties of forming a government, they represent the biggest risks of upsetting economic policy next year.

This was also evident in the remarks, last week, of the European Commission (in the first post-program evaluation report), the OECD (in its World Economic Outlook) and the Parliamentary Budget Office in its opinion on the budget, but also from unofficial comments from European sources.

Along with the positive conclusions about this year’s high growth rate, they strongly expressed their concerns about the risks that lie ahead.

Ministry officials argue that with today’s energy prices the 1 billion euros (0.5% of GDP) budgeted for supporting electricity tariffs will be enough, though no one can guarantee that prices will remain at these levels.