The scenarios for the new support measures for September

By Tasos Dasopoulos

The final cost of implementing the measures that have already been announced, such as intervention in electricity tariffs, or are to be implemented, such as Fuel Pass 2, will determine the continuation of the support measures until the end of the year.

Competent sources of the Ministry of Finance now state that at the present stage we have a positive and a negative factor. On the one hand, tourism promises that it can, until the end of 2022, provide additional budgetary space of 3 billion euros, reaching – or even exceeding – turnover in 2019. On the other hand, we have the rally of natural gas, with the price yesterday exceeding 161 euros per thermal megawatt hour, from 93 euros just 20 days ago, in mid-June. Fuel imports with ever-increasing price are reducing the available fiscal space at a fast pace.

Already the increase in the price of natural gas is making the budget of the measure of the indirect suspension of the readjustment clause, in the electricity tariffs, bigger, from August until the middle of 2023. Sources from the Ministry of Finance state with certainty that the 2 billion that have calculated for the measure will not be sufficient. This given that the wholesale price of electricity has been above 300 euros for many days (yesterday it was at 323 euros), while the budget was made with a base price of 250 euros. More budget support will therefore be needed to absorb the increases for business and household tariffs.

Regarding the second measure which has already been announced and will start running from the end of the month, the second fuel subsidy in a row (Fuel Pass 2), it becomes more difficult to continue it until the end of the year. Based on the announcements of the upcoming subsidy, a third will follow in the last quarter of 2022, which will need about another €200 million to cover consumers until December.

Turning off the faucet from Russia

In the second half of 2022, all EU countries – and together with Greece – are waiting for the completion of what Russia has already started: the definitive interruption of natural gas supplies to Europe. Such a move will bring the energy crisis to a head, sending the price of natural gas even higher, for an unknown amount of time.

The consequences will be multiple and painful for all of Europe and for Greece as the support measures will then have to be recalculated, in the light of the new developments. The assessment is that the dynamics of tourism is not expected to reverse. But it is not certain that the same will happen for exports and private consumption, as incomes will shrink further not only in Greece, but also in our main trading partners in the EU.

At the same time, the impact on growth from the increase in the cost of money, which will start from the middle of the month and will peak in September, should also be calculated. Perhaps, in the early autumn, we will have a more aggressive interest rate policy from the ECB, if inflation continues to rise.

It is obvious that all this will change the scope that the Ministry of Finance will have for interventions on the accuracy front. For this reason, the leadership of the Ministry of Finance refuses to commit now to a new punctuality check for the autumn.