Optimistic about the exit from the bailout program in August and the fiscal performance of the country, Greek Finance Minister, Euclid Tsakalotos, did not rule out that the long-term fiscal targets could be reviewed or that a further debt relief could be achieved with the country’s creditors. Confident that Greece will keep the pace of performing better than its fiscal targets – at least in 2018 – , the finance minister reiterated the government plans for measures counter to austerity like distribution of so-called social dividend to the needy, but also income and property tax decreases as well as cuts in social security contributions and increase of the minimum wage.
In an interview with reuters, Tsakalotos said among others that Greece has the capacity to finance itself unaided under a debt relief deal linked to its exit from an international bailout, however he did rule out that the agreement’s long-term fiscal targets could at some point be reviewed.
Euclid Tsakalotos said Greece had honored its promises to creditors.
The deal that euro zone finance ministers agreed in June to smooth next month’s exit from its third bailout offered clarity and reassurance to investors in Greece,” he told Reuters. That applied “whether we are talking about a 10-year government bond or whether we talk about foreign direct investment”.
“I had told them (potential investors) that all pieces of the puzzle would all come together … and they did,” Tsakalotos said, referring to a previous trip to the United States.
“(This time)… I just want to go through with them their views, my views, on why we should be much more confident on Greece after the Aug. 21 when we leave the program.”
Asked if Greece would need further debt relief to sustain market access and to be able to service its debt in the long run, as the International Monetary Fund suggested in a report last week, Tsakalotos said that a 2017 promise by European lenders to do more if needed was a further safety net.
“As things stand now and if we have serious government policy from now on, which has sustainable growth and does treat our growth strategy seriously … then I think everything is in place for sustainability,” he said.
He said the government’s goal was to tackle the debt burden through reforms and sustained higher growth as well as relief measures.
Greece has so far performed better than its fiscal targets
Tsakalotos said that the level of austerity was higher than he would like but the issue could be revisited in the long run.
“The fiscal surplus, if you ask me as an economist, is too high,” he said. “The European economies in general have got a framework which puts too much emphasis on fiscal austerity.
“The Greek government will look at this and so will the finance ministers, to see whether the IMF is right, whether there is a problem with sustainability.”
Greece is set to beat its targets again this year, giving it leeway to distribute a fiscal dividend to those who need it the most. Tsakalotos’ team will shortly propose where the extra funds should be spent.
He acknowledged there should be better fiscal targeting and that reducing income and property tax was being explored. Greece wants to reinstate collective salary agreements and increase the minimum wage, and may also cut social security contributions, he said.
“What is the real problem … is who pays those taxes – that’s what we will be concentrating on, that’s why I said that we were perhaps thinking of reducing social security contributions.
“Because there are clearly quite a lot of self-employed and small businesses, who have been hit both by an increase in taxes and social security (contributions),” Euclid Tsakalotos said.
for full interview click link above.
Of course, Tsakalotos did not reveal when all these ambitious plans to relieve large parts of the Greece society will happen or start to happen. the distribution of the social dividend is considered certain at the end of the year, like a Christmas bonus. The property tax notices for 2018 will be issued in August and much to my knowledge there is some tiny decrease in certain areas and certain criteria.
As for income tax, we will have some hint if it will happen when the government will table the Budget for 2019.
All finance ministers are always optimistic. Very few are really competent.