InsiderEconomyGreen Deal transition to have repercussions on vulnerable groups, Finance Minister warns

Green Deal transition to have repercussions on vulnerable groups, Finance Minister warns

Transition to Green Deal will have a very significant cost and will affect vulnerable groups of society, said on Friday Finance Minister Constantinos  Petrides.

Speaking at the 12th Limassol Economic Forum he said that in the post-pandemic era, conditions have certainly been unprecedented, expressing the believe that managing economic policies from now on will be very different both for Cyprus and in Europe than in the past.

He said, “we are experiencing something that has not been predicted, a sharp increase in prices in some sectors of the economy and for the first time in many years, we are experiencing inflationary pressures”.

The Minister said that initial estimates indicate that this is transient and this is due to the demand for products and that the economy has been interrupted and some sectors of the economy have not yet stabilized or it is due to the drop in natural gas supplies or the weather that created a demand for certain products.

However, he said his view is not optimistic and that he believes the inflationary situation is due to a different reason.

Petrides explained that during COVID-19 there have been incredibly large state interventions and the response of the EU itself and the US is for even greater state interventions. To this end the Minister referred to the EU Development and Competitiveness Plan, which throws an additional 700 billion euros in the market, adding that “surely this will not be without ramifications in terms of the raw materials’ market, the iron market and specific products”.

He said the economic policy changes with the Green Deal and acknowledged that we have to give our children a more environment-friendly planet, adding however that this transition will not be easy.

Transition to Green Deal will have a very significant cost” the minister said, as the Green Deal will affect the vulnerable groups of the population because the green tax will push the oil prices up. This is why funds are being made available by the EU and countries to enable compensatory measures.

Noting that emissions should be reduced by 55% by 2050, these declarations or policies are easier said than done as they will have a cost.

Therefore, he stressed, “we must be very careful with regard to making these policies, so as not to create the distortions that we do not want or to affect in unfairly way certain groups of the population, or the competitiveness of the Cypriot and European economy”.

We must be very careful, he added, noting that the viability of the economy should be protected and the COVID crisis does not turn into a debt crisis.

On his part, Greek Finance minister Christos Staikouras said both Greece and Cyprus have effectively handled the unprecedented health crisis.
Also attending the forum, Staikouras said Europe acted a lot faster and effectively than in the past. Cyprus and Greece, he added, acted rationally, channeling resources, shielding households and businesses affected by the crisis.

Greece, he said, is recovering strongly, noting that he prefers to be conservative in his estimates and believes that the recovery this year will be 6.1%. “We have significantly reduced unemployment by 3% over the past two years, improved industrial production, and improved the economic climate to pre-pandemic levels”, he added.

The economy’s competitiveness, he also said, is improving and the country’s economic outlook upgraded four times during the pandemic.

The conclusion, he noted, is that “Greece and Cyprus have effectively handled an unprecedented health crisis”.

This, he said, does not mean there are no challenges. He agreed with Petrides about the energy crisis, noting that measures are necessary on a national and European level.

Staikouras outlined the objectives in Greece`s Plan for the next four years which include high growth, sustainable growth, exiting the enhanced surveillance status in 2022 and achieving a single-digit percentage of red loans in 2022, a goal for both countries.

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