Reportage: Stelios Kandias
Inflationary pressures in Europe as a result of the war in Ukraine, European fiscal rules in the wake of Greece’s exit from the enhanced surveillance regime and the disbursement of the first installment of 3.6 billion euros from the Recovery Fund were the focus of the 7th Economic Forum. of Delphi.
“Uncertainty is my biggest concern”
“Uncertainty is my biggest concern,” the finance minister told the Forum Christos Staikouras. “We have had successive crises, we are trying to pursue the best policies at home and abroad,” he said.
As for inflation, he explained that its growth before the Ukrainian crisis was largely due to the strong recovery of European economies, and then came the Russian invasion to aggravate the situation.
Downward growth and inflation will be revised, but in all countries, he said on the budget. The 2022 budget will change to key assumptions, he admitted, because of the effects of the war. Reiterating that the supplementary budget will be submitted to Parliament within the week.
He emphasized the need to focus on European issues, and said that it was even more important now with the crisis over Ukraine. The main source of inflation is energy explained.
RRF: Disbursement of the first installment
The disbursement of the first tranche from the Recovery Fund (RRF) to Greece was announced on Friday by the European Commissioner for Economic Planning and Budget Johannes Han at the Delphi Forum.
In particular, regarding Greece, the Austrian Commissioner stressed regarding the 3.55 billion, that 1.6 relate to European subsidies, while the remaining amount is covered by borrowing through the Fund.
He also described European measures as adequate to tackle the grain crisis, and referred to the role of the EU. to curb rising energy prices, and food prices.
“We have allowed states to reduce taxes,” he said, adding that “more than 70 million people and millions of SMEs are benefiting from measures to tackle the energy crisis, while activating primary production funding to finance high costs.” .
Electronic platform for investment projects
The operation, soon, of an electronic platform through which the investment plans that will be implemented through loans of the Recovery Fund will be submitted, evaluated and controlled, was announced by the Deputy Minister of Finance, Theodoros Skylakakis.
Mr. Skylakakis also noted that the energy crisis and inflation will make necessary limited adjustments to the Greece 2.0 plan, due to the rebranding of investment plans.
As he explained, the Recovery Fund was designed taking into account crisis conditions. Almost half (investments through loans) are made to automatically adapt to the new data, while the rest of the program will have reasonable adjustments. Thus, the overall design and philosophy will not be affected. Instead, Recovery Fund categories, such as the green transition and energy investment, will accelerate.
“We will do whatever is necessary”
The phrase of the then President of the European Central Bank Mario Draghi 10 years ago “we will do whatever is needed” was used on Friday by the Governor of the Bank of Greece Giannis Stournarasreferring this time to tackling the strong inflationary pressures facing Europe.
“At this stage there is no risk of recession in Europe,” the BoG governor assured.
Before the pandemic we had a problem with low inflation and proceeded with measures such as QE (quantitative easing). The pandemic and the war in Ukraine caused side shocks to supplies we could not have foreseen. We will not let inflation get out of control and spread in the labor market, we will do what is necessary so that temporary inflation does not become a structural problem, said the BoG governor and member of the ECB.
Need to maintain debt sustainability
The main purpose of the stability pact is and must remain the maintenance of debt sustainability, insisted the head of the ESM Klaus Regling.
“Fiscal coordination in an efficient manner, with debt sustainability in all Member States in each case,” he noted.
Mr Regling said there were other tools, such as the European budget that has been financing the poorest countries for 60 years, which can be increased, the European Investment Bank and other financial vehicles.
He recalled the ESM’s proposal to change the fiscal rules, which includes raising the debt ceiling from 60% to 100% of GDP.
He emphasized, however, that the European Union’s resilience to crisis is not limited to fiscal rules, but requires an extensive process of completing other areas such as the capital markets.
“European innocence”
As for the Ukrainian and European energy dependence on Moscow, according to the Minister of Development Adoni Georgiadi Europe was moving very naively towards Russia. “She trusted her energy to the ruthless Putin, she made a mistake somewhere. Putin would not have made the decision to invade Ukraine if Europe had not been dependent on Russian gas. From Crimea (2014), if not Georgia (2008) “Europe should have turned to energy. Putin believed we would do nothing, he did not expect Europe to react so unitedly.”
He clarified, however, that after the massacres in Ukraine “doing business with Russia from now on will be completely unbearable. Europe has some values”.
Ukrainian and tourist market
Asked about the war in Ukraine, the Minister of Tourism Vassilis Kikilias estimated that it would not significantly affect the domestic tourism market as in recent years the flow of tourist flows from Russia and Ukraine was declining, but wished the war to end quickly.
RES will drop prices
As underlined by o Christian Kettel Thomsen, Vice President of the European Investment Bank The war in Ukraine has dramatically changed the energy situation in Europe. He stressed that governments want to break the Russia-Europe interdependence, which has implications for households and businesses, with a sharp rise in energy prices.
He argued that the goal of complete independence from Russia is in line with Paris’s goals for 2050, estimating that Renewable Energy Sources will lower prices in the medium and long term.
As for the current agenda of the Forum, just a few of the speakers in chronological order:
Stelios Petsas
Klaus Regling
Nikos Dendias
Costas Karamanlis
Giannis Stournaras
Kostis Hatzidakis
Kyriakos Mitsotakis
Akis Skertsos
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