Greece: Staikouras announces coronavirus-related fiscal measures

Greece: Staikouras announces coronavirus-related fiscal measures

The Greek side’s expectations from Monday’s Eurogroup

The additional cost for Health Expenses to be approved by the Ministry of Finance in 2020 is estimated at € 200 million euro according to Finance Minister Christos Staikouras, as he announced new financial measures due to the spread of coronavirus.

The minister stressed that there would be legislative intervention to support not only companies forced by law to shut down, but also entire sectors affected by the financial crisis, based on data the Finance Ministry will collect for the first time this weekend from banks, the Tax Office, the State Treasury – but also reports or data from private sector bodies. The measures will address not only tax incentives but also aid prepared by the Ministry of Labor.

In this context, the Greek government is joining the Eurogroup next Monday, March 16, expecting a cyclical reduction in the surplus target (3.5% commitment in 2020). This means that as the growth of the Greek economy slows down in relation to the latest EU forecasts, an equal amount should be curtailed from the primary surplus target. For example, if by 2020 the rate is at 1.4% (the Commission’s forecast was 2.4% prior to coronavirus), then the target should be reduced from 3.5% to 2.5%. At the same time, the Greek Government is looking to request through Finance Minister Christos Staikouras that refugee-related expenditures be excluded (0.4% of GDP), as well as all the expenses that will be arise for the enforcement of financial measures due to the outbreak of coronavirus.

According to the priorities set by Finance Minister Christos Staikouras, the Greek government’s targets for tomorrow’s Eurogroup will be as follows:

– full use of the flexibility provided for in the exceptional circumstances of the Stability and Growth Pact,

– applying this flexibility in our country with regard to this year’s primary surplus target, and

– expanding appropriately the costs excluded from the calculation of the primary surplus. This includes costs to support businesses, employees, citizens and health systems.

It is reported that state aid measures that have received special license by the Commission will soon be extended to businesses with significant turnover declines. In any case, everything is expected to clear up on Monday’s Eurogroup.

At the same time, the repayment of the state’s overdue debts to businesses and individuals, as well as providing liquidity to businesses that have been seriously affected by their economic activity is also provided, in order for the existing job positions to be maintained. The use of NSRF funds for working capital, flexibility in state aid rules and financial instruments will also be promoted.

The above suggestions are in line with the announcements made earlier by the Commission to elaborate on the terms of the Stability Pact. /ibna