Page 48 - bne monthly magazine October 2022

48 I Central Europe bne October 2022
Poorest under pressure
The cost-of-living increase is larger for lower- income households
(cost of living increase from higher energy proces, in percent of total household spending)
car owners can use a BGN0.25 (€12.3) per litre discount at petrol stations that is subsidised by the state.
Romania launched the so-called “cap and subsidy” scheme aimed at protect- ing end-users from excessive rises
in electricity and natural gas prices back in February, and it has since been extended as prices continue to rise.
Most recently, the government passed an emergency decree on September 1 amending and prolonging the decree issued in February pertaining to the “cap and subsidy” scheme. The new decree prolongs the validity of the scheme until the end of August 2023 (from the end
of March 2023) and seeks to secure a better balance between the cost of the subsidies and the revenues generated from the “solidarity contributions”, which are taxes levied on the “windfall revenues” derived by energy companies. The scheme will cost the budget some RON1bln (€200mn) per month and the solidarity contributions should entirely cover it, Minister of Finance Adrian Caciu said at a press conference after the government meeting.
In Croatia, the government is preparing to adopt a pack of financial measures that would help households and compa- nies deal with the surging prices. The government has already capped retail price of fuels and is amending it each week. It also has pledged a direct aid to households and retired people.
EU-level intervention
In addition to the measures taken by individual member states, governments are also looking for action at EU level. At a meeting on September 9, EU energy minis- ters are expected to back unprecedented interventions on the energy market in a bid to put a lid on the price rises that have plagued EU economies since Russia’s invasion of Ukraine in February.
Documents prepared by the Czech EU Council presidency, and obtained by Politico, warn that the interruption of supplies through Nord Stream 1 as well as other energy supply restrictions "are feeding rising inflation, and have severe impacts on all businesses and consumers”.
As well as this targeted aid, both Slove- nia’s current government and its prede- cessor have used fuel price caps. The former government under Janez Jansa introduced a flat measure ahead of the April general election, but uncapped it shortly when it became clear that Jansa’s Slovenian Democratic Party (SDS) had no chance of forming a cabinet. The new government led by Robert Golob has since reintroduced more progres- sive capping.
As observed by one bne IntelliNews reporter in Slovenia, these changes in policy saw cars lining up at petrol stations every time before easing in capping was announced, though the situation later stabilised.
In Bulgaria, prices started surging more rapidly since April due to high fuel costs. As a result, prices of basic food
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products increased by between 25%
and 40% for just a few months, affect- ing not only the households with low income but also those with higher living standard.
The authorities are also trying to reduce the electricity and heating price for households and companies, compen- sating that with the excessive profits of energy companies.
Direct financial aid is also provided to people whose incomes are below the poverty line, mainly retired people.
In Bulgaria, retail fuel prices jumped by between around 50% for diesel to more than four times for methane since April. In an attempt to mitigate these price hikes, the former government of Kiril Petkov introduced several measures. All