Pressure on fiscal policy plan
The government has to plan for its next economic policy moves, with polls fast approaching too, under increasing pressure for fiscal restraint by the European Union.
While Finance Ministry officials always leave the possibility of more support measures as long as there is fiscal space open in their public statements, for now they are acting cautiously. At least this was evident from the negotiations Minister Christos Staikouras had with bankers over relieving borrowers of some of the added pressure, where the banks were asked to bear the burden.
Prime Minister Kyriakos Mitsotakis sealed this line with his statements on Friday, during his meeting with President Katerina Sakellaropoulou. He called on banks to cover the support measures for vulnerable households out of their profits, instead of burdening the budget – i.e. the Greek taxpayer.
The government is expecting good news from Europe in the near future. On Monday, the Eurogroup is expected to green-light a total of 6 billion euros of debt relief. In particular, €620 million of the last installment of the return of profits from the Greek bonds held bye European central banks (SMPs and ANFAs) will be disbursed plus the €100 million from the abolition of the last semi-annual installment of the interest margin on the 2012 loan from the EFSF; meanwhile, the remaining installments of the interest margin until 2049, which add up to €5.2 billion, will also be written off.
Athens is also expecting the second tranche of the Recovery Fund – i.e. €3.6 billion – which will probably be disbursed at the beginning of 2023, after it has been approved by the relevant EU committees. Part of the tranche, €1.8 billion, which corresponds to the loans, has been secured three months earlier than planned, after meeting the relevant milestones.
Brussels, however, has at the same time signaled to the government it has been particularly generous in the support measures it has taken so far, occupying one of the first positions in the EU, even though Greece is an overindebted country and even without ensuring the measures are targeted. Making their measures targeted is the message sent to all member-states.
