With the effects of the war going to be great and with no one knowing when the Russian invasion of Ukraine will end, the government is using all the means at its disposal to deal with the energy crisis and with it the economic crisis.
The first weapon in the government’s arsenal was the payment on Friday of the first tranche of 3.6 billion euros from the 30.5 billion euros allocated to it from the NextGenerationEU recovery fund.
The funds are seen as a good start for the market to get moving, with Prime Minister Kyriakos Mitsotakis saying that with this money “big projects will start” while stressing there will be measures specifically to boost employment and the will reduce unemployment.
The second weapon is tourism. His prospects for this year were duly noted at his recent meeting with President Katerina Sakellaropoulou.
In particular, Mitsotakis noted that “tourism appears to be going very well this year”, stressing that he is not “particularly affected by the developments”, which will allow for a much better year than the previous two.
In fact, the signs so far suggest that Greek tourism could approach 2019 levels this summer. If so, it will provide the economy with some much-needed respite.
A third weapon for Greece would be European-level decisions on price controls.
Mitsotakis revisited the issue on Friday during a conference call with European Commission Executive Vice-President Valdis Dombrovskis, noting that there is an absolute need to take action at the next summit to prop up productivity in all member states and households are now being shaken by international price hikes after the pandemic.
What the government has noticed is that no EU country’s national budget can bear the burden caused by the energy crisis and that joint decisions are therefore needed.
At the same time, she is also aware that there is currently no room for either fiscal easing or additional aid.
Against this background, the most realistic scenario is the introduction of strict price controls to mitigate the impact of this crisis as much as possible.
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