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Economy

COVID-19 Lockdown Side Effect: Greek State Coffers Running Low

ATHENS – A fiscal side effect of the COVID-19 pandemic in Greece is the depleting of the state treasury, drained by subsidies to businesses closed during two lockdowns and aid to workers temporarily laid off.

The New Democracy government in the spring of 2019, when a first 10-week lockdown was imposed, closed non-essential business for 10 weeks and a second that began Nov. 7 isn’t scheduled to lift until at least Jan. 18.

That means businesses in the last 10 months will have been shut down 20 weeks, half of that time, preventing them from getting any income, saved by the state help and government requirements their rent be lowered.

Prime Minister Kyriakos Mitsotakis initially directed a 17.5  billion euro ($21.29 billion) injection into the economy that had just been starting to recover more quickly from a near decade-long crisis when COVID-19 hit.

Some 32 billion euros ($38.93 billion) in loans and grants from the European Union is providing a buffer for now as the government reported most of state money set aside has been spent.

Some 7.5 billion euros ($9.12 billion) was budgeted for that period but 6.5 billion euros ($7.91 billion) has been used, two weeks into the year, said Kathimerini, the Finance Ministry still trying to figure out how to help businesses survive the second lockdown.

While a vaccination program is slowly being rolled out there’s worry that a more lenient second lockdown and allowing churches to violate health protocols for Epiphany Day celebrations could bring a third wave that will see a spike in cases, deaths and people on ventilators and crush the economy more.

With state revenues depending on taxes now not being paid vanishing, the ministry is digging deep into an emergency reserve being used to channel liquidity to the market, most for a 2.2 billion euro ($2.68 billion) cheap state loan program.

The ministry is hoping to draw funds from the React EU program to deal with the economic crush of the pandemic, the paper said, partially paying for the loans given companies to offset losses in state coffers.

Adding to the worry is that Greece must pay the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) an 11.5 billion euro ($13.99 billion) installment of three rescue loans of 326 billion euros ($396.56 billion) that will take decades to finish.

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