A new package of aid measures is in the works

By Chrysostomos Tsoufis

“I estimate that fiscal space will also be created in the first half of 2023. If it is created, as my estimates are, it will be returned to society.” 48 hours before the change of time, Christos Staikouras, in an unusual move for him (it is known how carefully he expresses himself), speaking to MEGA, did not just wink but actually announced another package of interventions.

The Minister of Finance is talking about six months, but – as we have written again on – the package of measures is more likely to come before the elections and not only for political reasons which are clear. Adequate picture of how the government’s fiscal capabilities will be in March, we don’t need to get to June. Let alone that in June it may no longer be a government.

Christos Staikouras mentioned 2 sources from which the needed resources can come.

The first, and obvious, is the implementation of the budget and the second is the famous reserve of €1 billion that the Ministry of Finance has set aside in case more money is needed than what has been calculated in the 2023 budget to support households and businesses against the energy crisis. Everything will depend on the prices of natural gas and oil which are currently relatively low but with the ups and downs that have occurred this year, no one can safely predict how they will move in 2023.

However, the measures will not include a reduction in VAT on food or fuel, an intervention that came to the fore again after the decision of the Spanish government to zero for 6 months VAT on certain products such as bread and milk and reduce it on others such as cooking oil and legumes.

The government makes it clear that there is no fiscal space for such interventions. The reduction in VAT on food and fuel for one year proposed by SYRIZA is priced at €3.5 billion, with the government wondering which of the tax reductions it has implemented must be revoked in order to find the money.

Moreover, such an intervention is doubtful whether it would reach the pockets of consumers in its entirety with Christos Staikouras admitting that the government reduced VAT in focus to support the sector during the pandemic knowing that the benefit to citizens would be lost in the supply chain .

The government’s third argument is that according to its calculations, a family of 4 benefits from the measures taken by the Spanish government €36 per month when the benefit for the same family is only from the market pass, which will also be valid for 6 months from February it is €52

Among the measures that the government is NOT considering is a new 120 installment arrangement and a freeze on rent increases.

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