MINISTER OF FINANCE
Greece 2020 I Finance I Leader
BIOGRAPHY He holds a degree in Mechanical Engineering from the National Technical University of Athens (NTUA), a Master in Business Administration
(MBA) from the University of London, and a Doctor’s Degree (Ph.D. in banking) from the Department of Banking and Finance of Cass Business School. He has been a member of the Greek parliament since 2007 and was appointed Minister of Finance in July 2019.
“THE FUNDAMENTAL OBJECTIVE OF THE GOVERNMENT'S HOLISTIC ECONOMIC TRANSFORMATION PROGRAM IS TO ACHIEVE HIGH AND SUSTAINABLE GROWTH RATES TO RESTORE OUR COUNTRY'S LOST WEALTH GRADUALLY.”
THE CENTRE-RIGHT NEW DEMOCRACY GOVERNMENT HAS VOWED TO IMPLEMENT A COMPREHENSIVE TAX REFORM THAT WILL HAVE A FOUR-YEAR HORIZON AND WILL ACCELERATE GROWTH. CAN YOU TELL US MORE ABOUT THIS STRATEGY AND IT WILL BE IMPLEMENTED?
The fundamental objective of the Government's holistic economic transformation program is to achieve high and sustainable growth rates to restore our country's lost wealth gradually. Our Government is committed to redistribute incomes to improve social cohesion, improve household income through mainly larger than initially planned tax cuts, enhance liquidity, change fiscal targets, as well as strengthen money and capital markets.
At the Ministry of Finance, we have designed a strategy divided in different pillars, which has started to be implemented since the first day we have been at the office. The first pillar of our strategy is the reduction of direct and indirect taxes. We have already implemented some major changes such as the reduction in the Real Estate Tax, reduced by an average of 22% and another reduction of 30% to follow, and the implementation of the installment scheme for private debt, but there is much more to be done. He stated that when the necessary additional fiscal space is created, there will be additional tax reliefs with the priority being the reduction of the solidarity levy and the further reduction of the Uniform Real Estate Ownership Tax (ENFIA).
We already see results with an increase in tax income collection raised to 85% from 80%. We believe that by reducing taxation, we are giving citizens an incentive to meet their obligations and, at the same reducing tax evasion. In cooperation with Public Debt Management Agency, we have started a debt sustainability assessment with the following objectives: faster growth, lower borrowing costs, early IMF repayment and the use of SMPs and ANFAs.
The second pillar is to boost the liquidity of our economy. We want to take full advantage of European Funds, not only structural ones but in general. We have abolished capital controls and enhanced credit expansion with local banks. A major priority is to reduce bad loans (NPLs) and we will be launching in 2020 a second systemic intervention for the reduction of NPLs. The Hercules plan is estimated to lead a significant reduction of over €30 billion or more than 40% of the NPLs, leaving open the possibility of additional interventions in the new year which will further reduce bad loans.
“WE WANT TO PERSUADE CREDIT AGENCIES WITHIN THE NEXT TWO YEARS THAT GREECE
CAN BE AN INVESTMENT-GRADE.”
The third pillar is the implementation of structural reforms, which will affect all sectors of the economy, including public administration. This will also include an extensive privatization process, including the Athens International Airport, Hellenic Petroleum, DEPA, and Hellinikon. We must reach higher economic growth rates as this will affect our fiscal targets, reduce interest rates and enhance debt sustainability. This is essential for our discussions with the IMF and European institutions to establish a mechanism that will allow surpluses to be transferred in the coming year in order to reduce primary surplus targets to 2% of GDP instead of the current 3.5%.
THE INCREASE OF THE STOCK MARKET INDEX IN 2019 HAS PROVED THAT GREECE IS BEING POSITIVELY ASSESSED BY INVESTORS. WHAT IS BEING DONE TO IMPROVE THIS PERSPECTIVE?
The Greek stock market has not only grown but it was the top performer globally in 2019. Our goal for 2020 is to drain significant capital from the capital market to boost enterprises and the economy. Generally speaking, there is a great interest from foreign investors to come to Greece. The reforms are certainly improving the economic environment in the country.
We want to persuade credit agencies within the next two years that Greece can be an investment-grade. At the same time, we want to exit on a consistent way to international markets on several different maturities from three to fifteen years. We have already captured the maximum amount of money we needed for 2019 in the first semester of the year.
The Government’s plan foresees targeted interventions in the main pillars of the economy as the financial sector, the structural reforms, the liquidity of the real economy and the management of the public debt. The aim is not only to support the growth but also to guarantee that this will be carried out in the people’s interest.