ATHENS – Eyeing elections in 2023 – if not sooner – Greek Prime Minister Kyriakos Mitsotakis is between a rock and a hard place, with the major opposition SYRIZA sniping and the economy facing inflation and soaring energy prices.
That’s being compounded by an expected shift in the Eurozone monetary policy with the earlier-than-expected rise in interest rates due to the strong inflationary pressures that will add new economic risks, said Kathimerini.
adds new risks to the Greek economy.
The report said that a key effect will be more expensive costs for borrowing money in the markets and there’s worry there could be a cutback in investments just as Mitsotakis has been successful in luring foreign businesses to spur a recovery during the COVID-19 pandemic.
Hit with higher prices across the board, consumers and households are also cutting back in spending and the government hasn’t moved to lower the 24 percent Value Added Tax (VAT) on food.
Businesses will also feel the pinch of higher borrowing costs that could see them pull in the reins and lose turnover, which will produce fewer tax euros just when they are needed and banks fret about a return to more bad loans.
Businesses will take a blow, the same analysts explain, as the cost of
Finance Ministry officials are also worried the high interest rates may lead to pressure for achieving higher primary budget surpluses, as interest payments will cost more, the paper said, limiting further tax break potential.
But the number one worry is whether soaring inflation and other factors will create a recession despite big arrivals in tourism, which is the country;s biggest revenue engine.
There is a cash reserve of 39 billion euros ($40.62 billion) and the government received 32 billion euros ($33.33 billion) in European Union loans and grants but no report where it went.