Tax revenues and tourism will determine the expansion of the fiscal space

In addition budgetary area looking for it financial staff of the governmentin order to have news intervention in fuel prices to support households. The upward trend in fuel prices worries the government’s financial staff, which is planning new measures to support consumers.

THE Minister of Finance Christos Staikourasin recent statements, although he stressed that no final decisions have been taken on new intervention, he nevertheless expressed optimism that additional fiscal space could be created, which will be returned to society, in order to mitigate the consequences it causes. inflation and rising energy prices and of course in fuel.

Specifically, the minister has stressed “I am optimistic that we will again find budgetary space, as evidenced by the implementation of the budget for measures to support households and businesses».

The additional fiscal space is estimated to come from two main sources, which complement each other.

The first concerns the course of public revenues. Already in the first 4 months of the year (January – April) the target has been exceeded which is over 1.7 billion euros. Of course, most of this excess has already been spent, since the package of electricity supplies that is implemented immediately is of the order of 3.2 billion euros. Reports indicate that in May, revenues moved well above the target.

The intervention in electricity moves in the following three stages:

1. Compensation from 18 to 600 euros for all those (with a net income of up to 45,000 euros) who already have increased accounts from December 2021 to May 2022. 60% of the extra charge will be paid as compensation for this entire period. .
2. The subsidy for the period May – June 2022 is increased, to cover most of the additional charges.
3. From the 1st of July, the way of calculating the charges changes, so that 80% to 90% of the additional costs are covered.

The second source of revenue growth is tourism. The first signs are very positive and everyone is talking about an exceptional April, while in May there are many indications that converge on the conclusion that revenues may have even exceeded those of the corresponding month of 2019.

So if the trend that appears, consolidates in the next period means increased public revenues for the coming months. If all of the above are confirmed in practice, then it is certain that an additional budget space will have been created that will be able to adequately finance a new intervention.

There are more than one scenario, although market participants estimate that the pump subsidy will prevail. Note that this is already the case for diesel at 15 cents per liter. If extended to petrol, then the subsidy is estimated to be in the range of 20 to 30 cents per literwhile it is not excluded that there may be a small increase in the subsidy for diesel.