The Arabic world crisis is torpedoing the memorandum

The public uprisings in the Middle East are a minefield for the economic policy program of our country and the negotiations with European partners concerning the decisions of the summit about Greece.

The subsequent explosion in oil prices creates new data that reverses not only the original plans, but also possibly the extent of tax equalisation on heating oil.

The Finance Ministry has prepared a budget for this year, assuming only a small increase in international oil prices of up to 90-95 dollars per barrel. Against this background,  global growth was expected at 0,6% of the GDP and would have created favorable conditions for a faster exit from the Greek debt problem.

However, already in the first two months of the year, and after the events on the coast of North Africa, bordering the Mediterranean, the price of oil has reached as much as 102 dollars per barrel.

The growth rate is clipped

Certain analysts are predicting new growth, which will threaten to "swallow" economic recovery, as it is estimated that for every 10-dollar increase in oil prices, the global GDP is clipped by 0,5%. So, instead of a 0,6% growth, the global economy is flirting with zero or negative growth this year, dragging down the entire economic policy program along with it.

This development is causing concern even to the most powerful European players (eg Germany), which see their own potential for growth being threatened.

The heating oil headache

So, the entire March bazaar on Greek issues (reducing interest rates, extension, repurchase and debt reduction with cheap funds from the Support Mechanism), gets even more difficult, given that the Greek economy is more dependent on black gold.

Especially as concerns heating oil, in memorandum No.4 the government is committed to proceeding with legislation in order to remove the consumption reduced tax - to take effect from October 15, 2011 onwards - in order to secure net returns in state funds of at least 400 million euros in 2011 and 320 more in 2012.

As the economic team estimates, the road to October will be long. 2 more visits from auditors will come to pass and at least 2 macroeconomic forecasts for Greece and Europe will be issued by the European Commission, IMF and OECD. In this context, the memorandum can be changed, since it is dynamically modified and updated every three months.

And if eventually it is deemed necessary to remove the measure, it will have to be replaced with one or more austerity measures of equivalent fiscal results to the tune of approximately 400+300 million for 2011 and 2012 respectively...