Euclid Tsakalotos

MINISTER OF FINANCE

Greece 2019  I  Finance  I  Leader

BIOGRAPHY he studied Economics, Politics and Philosophy at the Universities of Oxford and Sussex and completed his PhD in 1989 at the University of Oxford. On 27 January 2015, he was appointed Alternate Foreign Minister for International Economic Relations, in the Ministry of Foreign Affairs. On 6 July 2015, he was appointed Minister of Finance. he was re-appointed Minister of Finance on 23 September 2015.

“WE ARE GOING IN THE RIGHT DIRECTION, WE HAVE BEEN UPGRADED BY RATING AGENCIES AND WE HAVE EVERY REASON TO BE CONFIDENT ABOUT THE FUTURE.”

WHAT SHOULD BE THE FOCUS OF REFORMING THE GREEK ECONOMY IN THE COMING MONTHS?

 

We’ve done a lot of reforms over the last 4-5 years and our reform strategy is focused on three major priorities in the economy. The first is speeding up the justice system. The other is continuing with public administration reforms, and the third is improving the business environment. In parallel, we are also trying to build up a social state, a welfare state in Greece for the first time. We want a model that has a role for the private sector, a role for the public sector and a role for the social sector, where Greece is lagging other countries. For instance, the social economy in a country like France can be 10 or 15 % of GDP while in Greece it’s only 1% – there’s lots of scope for cooperatives and people taking initiatives and it’s something between the public and the private sector. With this in mind we have introduced legislation for social economy. We’ve also now got something like a sovereign wealth fund called HCAP. Withinit we’ve got real estate assets and state-owned enterprises (SOEs). It has a board now that can actually proceed with restructuring these firms, so that they can meet public needs much better.

 

We have a lot of legislation in the pipeline, a lot to do within the public administration and also with banks reducing their NPLs. I think the people are beginning to see in their pockets the difference as we come out of the Structural Adjustment Program. They’re beginning to see the effect of our housing policy. Most of the issues have been covered such as public administration, energy and the justice system. The major issue that most people have focused on is the protection of primary residences mainly because during the crisis people’s life plans are distorted because they thought they would have a certain amount of income and they find themselves with much less. 

 

We’re moving into a new system where people will be given support to be able to pay back their loans, especially those that are not being paid. This will also help the banks to clear up their non-performing loans. So, we have a law which will be the new framework which we are now discussing both with the Hellenic Banking Association, with the banks and the ECB to make sure this is a win-win situation for everyone involved. It will be good for the people who have got a loan in which they are struggling to be able to pay and it is good for the banks that will be able to reduce their NPL bills much faster.The view of our government is that we need to get out of the crisis without returning to the pre-crisis model because the pre-crisis model had a lot of deficiencies. If it hadn’t a lot of deficiencies, we would not have gotten into the crisis.

 

GREECE HAS ISSUED THE FIRST POST BAILOUT BOND WHICH WAS QUITE SUCCESSFUL. WHAT ARE THE STEPS BEING TAKEN BY THE GOVERNMENT TO FURTHER IMPROVE THE BUSINESS ENVIRONMENT?

 

This issue covers both the creditors and the institutions that are confident in Greece's continuing on a reform strategy. We have a cash buffer which means our debt is in a very good situation after the summer deal. This is why we were able to go out to the markets and why investors are confident in the Greek economy and the spreads are reduced, even the 10-year bond yield has reduced. 

 

 

“I CAN CONFIDENTLY SAY THAT SKEPTICISM HAS SERIOUSLY BEEN REDUCED AND PEOPLE ARE FEELING CONFIDENT ABOUT THE FUTURE THE GREEK ECONOMY.”

 

 

We will continue with a strategy of implementing necessary reforms while not surprising investors by being transparent about our objectives and its implementation. We are also taking steps to improve the business environment through a balanced and planned approach. The government has announced a reduction of one percent in the corporate tax rate every year from 2019. 

 

We intend to shield Greece by the strategy we are putting in place. The first strategy is to have this buffer so effectively Greek debt is collateralized for the next two years. We’ve created a debt deal which means that we have lower repayment schedules than countries like Portugal and Spain over the next 50 years. That gives us the space in which to be able to have a serious discussion with opposition parties and social partners to have a growth strategy that begins to reduce the debt to GDP ratio from the denominator. We continue to protect Greece and the markets by being very open about our policies on growth. There is no hidden agenda and our growth strategy is publicly available and it's all budgeted to avoid any surprises. This is one of the main reasons why markets are looking differently to us. We are going in the right direction, we have been upgraded by rating agencies and we have every reason to be confident about the future.

 

WHAT IS YOUR MESSAGE TO FOREIGN INVESTORS INTERESTED IN GREECE?

 

I meet with international investors all the time. I can confidently say that skepticism has seriously been reduced and people are feeling confident about the future the Greek economy. Investors have seen our seriousness in implementing much-needed reforms. We have been able to get our act together in discussion both with both the financial community and rating agencies. We have only increased expenditure and reduced taxes to the amount agreed with the four institutions: ECB, ESM, IMF and European Commission. Investors also know that we are doing a lot to help the banks and the banks themselves are doing what they need to reduce their NPLs. We have recently suggested a strategy for an asset protection scheme which I have ve sent to the Directorate of Competition in the European Union. I think they are also seeing the light on how Greece is going to come out of the crisis.