Some subsidies to continue as handout expectations are dampened

Government plans call for a gradual withdrawal of income support measures, as the country must once again produce significant primary budget surpluses. Accordingly, the Ministry of Finance has tried to contain expectations of handouts at Prime Minister Kyriakos Mitsotakis’ keynote speech at the Thessaloniki International Fair on September 9.

There are signs, however, that income support schemes such as the “Market Pass” and electricity bill subsidies will continue at least to the end of the year, especially as power companies have announced higher electricity prices. Officials would like the electricity cost to consumers to stay roughly the same after taking account of the subsidy.

As far as the Market Pass is concerned, an extra round of financial aid to cover household expenditures can be expected by the end of the year, in addition to that scheduled for late September or early October. The fact that inflation has recently spiked – even though, at 3.5% according to the EU’s harmonized index of consumer prices for July it was lower than the eurozone average of 5.3% – is worrying the government, hence the decision for another round of assistance.

As for electricity, it is a given that subsidies on bills will remain until the end of the year. And, depending on how wholesale prices evolve, they may even continue into the next.

The European Commission’s direction, which the government shares, is to gradually withdraw subsidies except for the lowest incomes. Environment and Energy Minister Theodoros Skylakakis has also declared this is the plan concerning electricity and heating oil subsidies. But no specific dates have been announced for switching the subsidy system to help only the most vulnerable.

Mitsotakis has also hinted that an additional group to receive aid is pensioners who, because of legislation passed years ago, will see their pensions cut.

In any case, officials warn that the main features of economic policy in the first term of the conservative government will change. For example, there will be no more tax decreases other than those announced before the recent double election, that is, a slight decrease in social security contributions and the gradual elimination of a special levy on professionals.