“It does not mean that you reduce VAT and automatically reduce prices on products, or that you reduce the Excise Tax on fuel and automatically reduce prices on fuel. This has never been the case until today “, stressed the Minister of Development and Investments, Adonis Georgiadestalking to the First Program about rising inflation.
“If we have a VAT reduction on a number of products, it is certain that the reduction will not go to the final prices. “The horizontal reduction of taxes as an effect on the final prices on the shelf is of relative importance”, said the minister and gave as an example the reduction of VAT in the focus from 23% to 13%, wondering if then the products were automatically reduced by 10 units.
“Of course not,” he noted, as when VAT was raised from 13% to 23%, did prices increase by 10 points? No. “Because businesses tend to either take on some of the damage so as not to lose their customers, or at an easier time try to make up for the loss,” he explained.
According to him, the horizontal measures, which have high fiscal costs, are not going to help people because prices are not going to fall, while they will put the economy at great risk, because rising inflation is putting pressure on central banks to raise interest rates and this in turn automatically creates a new increase in countries’ lending rates. “Greece, due to being the country with the largest public debt, already has higher interest rates compared to others.
So is it wise to go it alone to raise interest rates on your bonds, which will soon turn into rising interest rates on mortgages, mortgages, business cards, etc.? That is, to tell someone you will save an X amount of gasoline and you will pay 3X on your card, or on your loan? », He wondered.
He fired shots at the official opposition, saying that some “suggest some easy measures, like Mr. Tsipras, who said that if SYRIZA were a government, the electricity tariffs would freeze.” “That is, you forgive me, for God’s sake. He was prime minister for 5 years. Greece is a country that imports energy. If you were to freeze invoices, what would really happen? Can you force a company, PPC or other providers, to sell electricity at a loss every day? Can you imagine the state going and saying I force all energy companies to go bankrupt? “I’m crazy just hearing it,” he said characteristically.
Asked how the government will deal with the situation, Mr. Georgiadis said that “we are planning a policy that says” I measure my public finances to see what I really have left over without endangering the long-term course of the country and I make some policies. which are aimed at those of our fellow citizens whose indeed these inflationary pressures create suffocating pressures in their lives “. “But we are not all people in the same bucket.”
“We know who the vulnerable are. Those who are below the poverty line. Announcements will be made when the finance staff is ready. We recognize the problem and work to find a solution. What I do not accept is easy opposition of people who have rediscovered the “money trees” and have easy solutions. “There are no easy solutions to this global inflation crisis.”
The problem of inflation is global
The Minister stressed that accuracy is not only observed in us. “The EU has the highest inflation since the founding of the Eurozone, the US the highest inflation in 40 years, Germany the highest inflation since World War II. “There are many theories and debates about what caused the global inflation boom after the pandemic.”
“Our inflation in January -6.4% on an annual basis- is the highest since 1997. Very high. It does not happen only to us. But what people do not see is that on a monthly basis, ie from December to January, Greece is one of the few countries that had a drop in inflation, minus 0.3%. The large number of 6.4% is estimated in January 2021, when we had the highest deflation rate in our history, minus 2.4%. So starting from a minus 2.4%, compared to an inflation period, inflation as a number increases a lot. That is, if you compare what you paid last January in January this year in the supermarket, the difference is very big. What is not directly understood is that if you compare January last year with last year, you were very low and deflation is a loss for the economy and businesses. It means that too many people are selling at a loss. “Like inflation, it’s a loss,” he said. “Except for the energy, the rest of the market tried – I’m not saying it succeeded, but it tried to come together.”
He also said: “If we were in January 2021 you would see in my office the farmers asking for financial support because the prices were so low that they were selling at a loss. “Neither could nor should prices stay where they were last January.”
Regarding the government’s market strategy, he said that it does not change “because it is successful” and that is why “we remain in the countries with the lowest inflation in Europe”.
He stressed that there are continuous inspections. “Yesterday, the Competition Commission re-entered the supermarket and wholesale chains to control the cartel case. We from the Ministry of Development do inspections every day. We also have institutional tools, such as the profit margin, to avoid an extra speculation of some on this global problem. “I believe we control it to a very large extent,” he noted.
He reiterated that because we have an economy interconnected with other economies. As he noted: “Since we have imported raw materials, imported energy, imported goods, it is impossible for us not to have inflation since everyone else has it. It would be supernatural, it can not happen. So in that sense, unfortunately, we will also have a period of inflationary pressures. Now, if the Commission’s estimates are confirmed, these inflationary pressures from the middle of the year will begin to subside. It remains to be seen. “
“We will not shake the ‘bank’ in the air”
Asked about possible benefits in anticipation of elections whenever they take place, Mr. Georgiadis stressed that “there is no case for this government, for pre-election reasons, to jeopardize the long-term course of the country. I say it and I sign it “. “We will not blow up the ‘bank’ in the air,” he said characteristically.
On the contrary, he said, “in the elections we will go honestly to the Greek people and we will ask for a fair judgment for what we have done these 4 years – they will be done in the end” and added: Such practices have brought Greece into crisis, we have come to make people’s lives better, not worse. A decision that will be taken with “political” criteria is ruled out, based on the next poll, without thinking about the consequences for the people. We will not endanger the country, after the decade 2010-2020, a step has been found before the acquisition of an investment grade, which means that it is returning to normalcy “.
“It is never possible for the government to risk 10 years of sacrifice for ‘political’ reasons,” he said, adding that this was unlikely to happen.
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