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Economy

Greece Can’t Afford to Keep Subsidizing Soaring Energy Bills

ATHENS – Greek households and businesses shouldn’t expect the state to keep bailing them out of huge electric and energy bills because the money is running out, Prime Minister Kyriakos Mitsotakis said.

The New Democracy Conservative leader said it will be a “difficult” winter with uncertainty about the continuation of Russian energy supplies that were exempted from European Union sanctions over the invasion of Ukraine.

“Any steps we take will be measured so that temporary needs do not undermine national imperatives… If we have succeeded in supporting society so far, to the best of our ability, it is precisely because we exhaust the fiscal limits, without abolishing them,” he told his ministers, said Kathimerini.

His government is paying up to 96 percent of the bills of households and 84 percent for businesses to offset the astronomical bills caused largely by the effect of the Ukrainian invasion and Russian supplies which account for some 40 percent of the needs of Greece and the European Union.

He said that his government would keep pumping in as much in subsidies as it can but said the constant flow of aid is cutting into the ability to keep paying despite estimates the economy will grow 4 percent this year.

That’s largely on the back of what could be another record-breaking tourism year during the waning COVID-19 pandemic which could bring in as many as 20 billion euros ($19.98 billion.)

“We will not give in to pressures beyond the maximum limits given to us by the General Accounting Office and the Ministry of Finance,” he said, the report also added of the financial boundaries.

“Resources are not inexhaustible and we must not forget that if the state today is able to support households and businesses with over 2 billion euros ($2 billion) per month for their electricity bills, it is also due to prudent policies that have increased public wealth so that it can be returned to the citizens,” he said.

The issue has added to the heat on his administration as he will face a re-election campaign in 2023 and the major rival SYRIZA and rising PASOK Socialists nipping at his heels.

He again said the EU should consider a cap on the wholesale price of natural gas and decoupling its price from that of electricity, with indications that it could be discussed as the crisis worsens.

“What Europe is discussing today, Greece has been implementing at the national level since July with the mechanism that recovers profits from companies at source to return them as support to society,” he said.

While the government has operations to reduce the use of energy in public buildings and households, many consumers have been doing that already and he said there won’t be planned power cuts this winter.

He warned that “if something drastic is not done at the European level, then large countries risk collapse,” and said that the dilemma “has features in common with a pandemic in terms of its potential consequences for the economy.”

Finance Ministry officials say the need to pour more money into electricity subsidies will “drastically” limit funds available for other kinds of income support, further affecting vulnerable people and households who are dependent.

Of the up to 3 billion euros ($3 billion) in expected available revenue, less than 700 million ($699.17 million) will be spent on programs other than providing energy cost aid, the paper said.

Mitsotakis will use his addresses at the Thessaloniki International Fair (TIF) Sept. 10-11 to deliver announcements about handouts and the extent of what can be done, awaiting Sept. 7 news about second quarter revenues.

Finance Minister Christos Staikouras said that, “The budget, tourism and the (GDP) growth rate in the second quarter will… be considered in looking for (spending) margins in the fourth quarter of 2022 and throughout 2023,” the election year.

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