As far as the course of inflation is concerned, the Minister of Finance estimates that, at a pan-European level, “it will decelerate in the coming years, but it will not leave us. It also has certain structural characteristics, which acquire a more permanent character.”
Summer will be created additional fiscal space, who again will be returned to the citizens as a whole, says the finance minister in an interview with APE-MPE Christos Staikouras. At the same time, as he points out, tax revenues continue to move above the targets (and in June they will be above the target), for reasons related to the good course of the economy, increased consumption and the better – in relation to the forecasts – course of tourism.
He mentions the measures for 2023 (which the Prime Minister also announced in Parliament) and adds that “from here on, the government, after the completion of its constitutional term, will put its planning for the next four years to the judgment of the citizens, which, since we have entered the last year, will begin to unfold».
About a possibility new exit to the marketsthe minister notes that a constant pursuit is the systematic communication between the country and the markets, if it is even possible – depending on the conditions in the international markets – with the lowest cost of borrowing. He adds that this can result from the contribution of external factors, such as the decisions of the ECB, however, it is mainly due to the applied economic policy.
While, for his course inflationestimates that, at pan-European level, “it will be scaled back in the coming years, but it will not leave us. It also has certain structural characteristics, which acquire a more permanent character”.
The full text of the interview of Finance Minister Christos Staikouras to APE – MPE and to journalist Omiros Emmanouilidis:
Mr. Minister, in August the country will exit the regime of enhanced supervision. However, which is more difficult, the quarterly control by the European Commission or the daily control of the markets in which we apply for loans? Does ECB support for Southern bonds facilitate a new exit to the markets?
The country’s exit from the regime of enhanced supervision, which it entered – alone in Europe – in 2018, marks the return to European normality and, together with the early repayment of loans from the International Monetary Fund and the lifting of capital restrictions, closes a difficult chapter for Greece.
Thanks to the hard and methodical work of the government, but also – above all – to the long-term sacrifices of Greek society, another great national goal is being achieved, which will have a positive impact on markets, investors and rating agencies.
Our constant pursuit is systematic communication of the country with the marketsif it is even possible – depending on the conditions in the international markets – with the lowest borrowing costs. This can occur with the contribution of external factors, such as the decisions of the European Central Bank in the context of maintaining favorable financial conditions for the member states of the eurozone. However, this is mainly due to the applied economic policy. Policy based on the tripartite implementation of a responsible fiscal policy, the implementation of structural changes and the exercise of a visionary publishing strategy.
This combination has allowed us to carry out, in the last three years, a series of successful exits in the markets – despite the adverse, international conditions – to reduce the spreads in relation to the other countries of the European South and to form safe cash reserves, which today exceed the 38 billion euros. Therefore, we will continue to act prudently, based on the above axes.
After exiting supervision, the next goal is to obtain investment grade. Is the 2023 timeline valid?
The exit from the regime of enhanced supervision brings it closer investment grade recovery in 2023, which is the last remaining goal we had set for this four-year period. We are still working, intensively and methodically, to achieve this goal as well, the achievement of which will bring significant benefits to society and the economy.
The international price of natural gas is increasing by leaps and bounds on an almost daily basis. In our country, every 10 euros above the price of 100 euros on an annual basis has a fiscal burden of 150 – 200 million euros. Given this, can the budget cope with the additional needs for support measures, and will there be a primary deficit this year? Do we expect that increased tourism revenue can cover some of this?
The implementation of the budget proves that the Greek economy has strength and dynamics. Tax revenues continue to move above targets, for reasons related to the good course of the economy, increased consumption and the better – compared to forecasts – course of tourism. In fact, you will soon see that, also in June, the revenue will be above the target.
With these data, we will continue to utilize the additional fiscal space that is created, together with the additional revenues of the Energy Transition Fund and the taxation of the surplus profits of energy producers, so that we bravely cover efficiently and in terms of social justice, households and businesses, for as long as needed.
Households are forced to cut back on spending due to punctuality. What impact can the reduction in consumer spending have on GDP, taking into account the “second thought”, as it sounds, for investments due to the excessive increase in costs (energy, raw materials, etc.)?
In times of crisis, there are risks like the ones you mention. But let’s see what the real facts are, at least to date: in the first quarter of 2022, despite significantly increased and consistently high inflation, total final consumer spending increased – year-on-year – by 10.5% and investment by 12.7%.
It is noteworthy that foreign direct investments exceeded 5 billion euros in 2021, a performance that is a record of the last 31 years, while this year in the first quarter they reached 3 billion euros, a level that portends a new record.
The assessment of the European Commission is that our country will emerge as the champion in Europe in investments until 2023, with a double-digit increase in them this year as well. As a government, we are implementing policies to maintain this momentum and limit downside risks.
Inflation forecasts for this year are revised at regular intervals on hand at pan-European level. What will happen to the national index? When do you see de-escalation?
Inflation, at the European level, indeed appears to be much higher than initially estimated. It is typical that the European Central Bank revised its estimates to 6.8%, from 3.2% in December 2021 and 1.5% initially, while for 2023 it predicts that it will be reduced by about half and in 2024 it is expected to range above from 2%.
Therefore, inflation is expected to moderate in the coming years, but it will not leave us. It also has certain structural characteristics, which acquire a more permanent character.
In the autumn, and in view of the drafting of the new budget, is the Ministry of Finance planning to announce a new “package” which will include on the one hand additional measures to support households and businesses and on the other hand measures with a horizon of 2023?
We have planned for measures to deal with the impact of energy costs on households and businesses, totaling €8.5 billion by the end of the year, and we have exhausted the available fiscal space created in the first five months of the year.
However, as I mentioned above, the government, whenever fiscal space is created, utilizes it fully, to the benefit of society, especially the middle class and the lower income strata.
Our estimate is that additional fiscal space will be created in the summer, which again will be returned to citizens in full. After all, some of the measures we have taken, such as the fuel subsidy with Fuel Pass 2have a time horizon until September.
As for 2023, the abolition of the solidarity levy is extended for income from the private sector and h reduction of insurance contributions. Additionally, as announced by the Prime Minister, from 1/1/2023 the solidarity levy will be abolished for civil servants and pensioners, i.e. for the whole of society, while pensions are unfrozen for the first time in 12 years and are set on a trajectory of regular and permanent increases.
From here on, the government, after the completion of its constitutional term, will put its planning for the next four years to the judgment of the citizens, which, since we have entered the last year, will begin to unfold.
Do you estimate that our country will fully cover the approximately 60 milestones to make it possible to disburse the tranche from the Recovery Fund?
We continue, at an intensive rate, the implementation of government policy in all fields and fronts. The Parliament has legislated about 330 bills in the three years of New Democracy’s rule and continues to legislate throughout July, promoting the implementation of important structural changes.
For example, in the last period of time, in the field of competence of the Ministry of Finance, key bills and provisions were promoted and passed, concerning the adoption of tax incentives for the green economy, energy and digitization, the reform of the institutional framework of the Financial Stability Fund and of the Investment Services Guarantee Fund, the modernization of the Public Debt Management Organization, the adoption of an integrated framework for the re-operation and performance of the sustainable development perspective of the Skaramangas Shipyards. Also, last Wednesday the bill on customs representation and the regulation of the customs agent profession was submitted to the Parliament.
As for the Recovery Fund, 230 projects have already been launched and are being implemented, with a total budget of 10.2 billion euros, which relate to the green and digital transition, employment, skills and social cohesion, as well as private investment and transformation of the economy. We continue, as a government, to operate coherently, collectively and effectively, under the guidance of the prime minister, to continue the implementation of the National Recovery and Resilience Plan “Greece 2.0”.
RES-EMP
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