Greece offers more aid to inflation-hit pensioners and businesses

ATHENS (Reuters) - Greece's conservative government on Wednesday announced more financial aid for pensioners, farmers and businesses hurt by inflation and costly energy bills, launching the latest measures months before a national election.

The government of Prime Minister Kyriakos Mitsotakis has spent more than 40 billion euros since 2020 on subsidies to support households and businesses struggling to cope with fallout from the COVID-19 pandemic and the Ukraine war.

Last month, it implemented an 8% payment rise for pensioners, the first since a 2010-2018 financial crisis which forced Greece to slash pensions in turn for about 260 billion euros in bailouts.

However, nearly half of the country's pensioners did not benefit from the rise because they did not meet the original criteria.

The new aid package, which will have a cost of about 800 million euros, includes a lump sum payment of between 200 and 300 euros for about one million pensioners by April, Finance Minister Christos Staikouras said in televised comments.

Staikouras added that a temporary reduction in sales tax for transport, coffee and non-alcoholic beverages would be extended for six months until the end of the year.

"The measure aims to support businesses, as those sectors, have been particularly hit by the financial impact of the pandemic and have still had increased operating costs, due to the energy crisis," he said.

Greece's annual EU-harmonised inflation slowed to 7.3% in January from 7.6% in December, easing to its lowest level since February last year, data showed on Wednesday.

Despite soaring energy costs since last year, Greece's economy has fared well thanks to increased tourism revenues. This year, Greece expects economic output to rise by 1.8% and sees a small primary surplus of 0.7% of gross domestic product in 2023 for the first time since 2019.

Higher-than-expected budget revenues in 2022 and a positive economic performance means the new aid package will not jeopardise the country's fiscal targets, Staikouras said.

Greek farmers will also get tax refunds for their transport fuel costs for 2023 and will benefit from a quicker disbursement of outstanding compensations for natural disasters.

(Reporting by Lefteris Papadimas; Editing by Angeliki Koutantou and Helen Popper)