Government seeks fiscal room to contain energy costs
Prime Minister Kyriakos Mitsotakis announced Thursday that the government will extend the diesel subsidy through October, increase the heating allowance and restore the cap on profit margins across the fuel distribution chain.
The measures are aimed at limiting the impact of the recent fuel price rally and preventing further pressure on household budgets.
Limited room in 2026 budget
Government discussions began with an estimated €30 million to €40 million in fiscal space remaining for 2026, according to Finance Ministry sources.
Officials have indicated that the amount alone would not be sufficient for measures with a major impact on retail prices. The government is therefore examining the possibility of reallocating spending between agencies if necessary.
The state budget reserve, designed to cover extraordinary and urgent needs, could also be used.
Heating oil support under review
Changes to the heating oil subsidy are also being considered, with the final form and scope expected to depend on the fiscal room available for 2026, potential measures at European level and the contribution of refineries.
Mitsotakis said there would be significant support from both the government and refineries, with the aim of keeping the starting price of heating oil below €1.75 per litre, the level reached in April.
The government is also considering whether to reduce VAT on fuel, although the prime minister said such a measure would depend on whether it could be supported at European level.
Government weighs broader response
The measures were discussed Wednesday at an expanded meeting at the prime minister’s office, as the government faces increased demands for support amid a difficult geopolitical environment and rising energy costs.
Officials are also monitoring whether higher fuel prices begin feeding into the cost of other goods and services.
The government’s response will depend on developments in energy markets, the fiscal position and possible European measures, while pressure is also being placed on refineries to contribute to efforts to contain prices.
Source:Kathimerini
