At KPMG’s CFO Forum<\/b>, the Finance Minister<\/b> presented a plan for further tax cuts<\/b>, boosting investment<\/b> and to<\/b>support the middle class<\/b>.<\/p>\n
On the framework of KPMG’s 24th CFO Forum in Greece, the Minister of National Economy and Finance Kyriakos Pierrakakis<\/b> highlighted the government’s strategy for continued tax cuts<\/b> and strengthening the growth momentum of Greek economy<\/b>, stressing that 83 taxes and contributions have already been reduced and that the goal remains to further reduce the burden on the middle class<\/b>, within the limits of the available fiscal space<\/b>. The minister emphasized the reformist direction of economic policy<\/b>, linking interventions to increasing investment<\/b>, improving employment and overall strengthening the resilience of the Greek economy<\/b> in an environment of geopolitical and energy uncertainties<\/b>.<\/p>\n
“We have cut 83 taxes and contributions<\/b> now, we need to cut others and others and others<\/b>, as as far as the middle class<\/b> is concerned, overtaxation continues to be a reality. And as long as fiscal space<\/b> is created, that is the priority of this government<\/b> and this prime minister, removing burdens from the economy<\/b>. So we will continue in that direction because, first of all, we recognize that that is the most beneficial direction to move the economy forward<\/b>.”<\/p>\nThe main message<\/h3>\n
This was pointed out, among other things, by Minister of National Economy and Finance Kyriakos Pierrakakis, in a discussion with journalist Nikos Filippidis, in the context of the 24th CFO Forum of KPMG in Greece, on “Economic Policy in an Environment of Geopolitical and Political Turbulence”. The main message of the conference: “The CFO Shift: Tech. Talent. Transformation”<\/p>\n
As for what will happen after the end of the Recovery Fund, the minister said that on the one hand the country has all the state funds, the increase in public investment, the new NSRF and the new funds coming from Brussels. This is part of the answer, he pointed out.<\/p>\n
While on private debt, he said that “we are implementing regulations that reward the punctual ones.”<\/p>\n<\/p>\n
In detail, points of interest from the discussion:<\/i><\/b><\/p>\nOn the different image of the country abroad and at home
<\/h3>\n
This is the dualism I experience as Greek finance minister and as Eurogroup chairman, in my Greek capacity. The dualism of vocabulary. When we cross the border and we are outside Greece, Greece is treated with a frighteningly positive vocabulary, because we are the country that overcame the existential crisis of the last decade, whether we are talking about tax evasion, whether we are talking about growth, whether we are talking about surpluses, whether we are talking about the debt curve. Whichever parameter you take, investment, exports… Greece has made staggering progress. Progress, which is even more illuminated by the challenges that other countries are experiencing. So, there is a very heavy burden when you speak in the capacity of the Greek finance minister right now, precisely because of the things that Greek society and the Greek polity has been called upon to manage over the past decade. That’s half of the equation.<\/p>\n
The other half is the crude belief that macroeconomic indicators don’t interest you when you’re at the supermarket checkout. So, you have to be able to simultaneously balance the two and establish the link between how the progress of the economy reaches every Greek household. It is reaching more and more, I will tell you. So, you ask me, “is it eating?” (schematically). When 600,000 jobs have been created, when we have more than doubled the growth rate, when we are about to reach an all-time low in unemployment, and when a number of actions have been taken, including short-term ones: fertilizers, diesel, support for families with children or tax reform, permanent measures, the abolition of ENFIA in 12,000 settlements… all of these, cumulatively, are working positively. It doesn’t solve the problem.<\/p>\n
It’s part of a path that solves the problem. And every day, every week, every month, the goal is to continually improve that picture. There is no other way. The only reliable way to be able to support those in greatest need is to build on solid gains. So that is what we will continue to do…considering that we are commending the credibility of our actions. But beyond that, I will tell you that there is also a connection between the national and the European. Greece is doing a lot of reforms, a lot of changes, trying to run faster, trying to bring in investment. As pieces of the equation are solved and European pieces of the equation are solved and all the things that we’ve been talking about in Europe, too, for decades, the more you will see the growth rate in Greece improve and solve a bigger piece of the equation that you’re asking me about.<\/p>\n
You all know what the escape clause is. It is the deviation from European fiscal rules, it is money again ours. It is the deviation from a new rule that has been introduced at the European level that says that we and the Commission agree on spending. Regardless of whether you have a surplus or a deficit, you can deviate from it based on your own policies, e.g. cracking down on tax evasion. So the European Union allows you to do what?. To have a deviation, initially in terms of defence, after Russia’s invasion of Ukraine.<\/p>\n
So it was thought that this particular escape clause could be linked to additional investment for energy. And I think the crisis in the Middle East makes that absolutely clear. And in terms of the effect that there is in terms of energy prices and in terms of the inflationary effect, the spillover effect on a number of products.<\/p>\n
We know that the European economy has shown resilience. We also know that the Greek economy has shown many times more resilience than the European average, this is reflected in the growth rate. Growth in the first quarter was 2 percent year-over-year, and that has come from more investment, more exports versus imports, and from the tax reform that we recently did.<\/p>\n
From there, if we look at where oil is today, where the barrel is, it’s at $92. That’s to say, the markets are not incorporating a worst-case scenario forecast into the price. The markets right now are alert, but they don’t have an extreme pessimism. It remains to be seen how quickly the Straits will open.<\/p>\n
I will tell you that there are three parameters that we are looking at: When will they open, how will they open, what will be the regime in the Straits. And how much damage will be done to the energy infrastructure in the region. So these three together make up the “status quo” that will exist next.<\/p>\n
All of this will see a reflection in prices. In terms of the supply treaty, it is a given that Asia has been hit harder than Europe and Europe has been hit harder than America. But beyond that, prices are global in nature. Therefore, on a global basis we are facing the problem. 20% of gas and oil goes through the Straits and very many other cases. The problem is big.<\/p>\n
But beyond that we know as Europe that we have to do a lot to better organize “our own house”. One part has to do with our own European-style reforms that we are discussing in the European Councils. One part has to do with energy investment. They are absolutely essential to get to where Europe can and obviously every national economy including ours.<\/p>\n
I am taking a step back because the bill is still in consultation and we will discuss the final parameters when it is tabled. I want to dwell a little bit on private debt because to me it is very important. I don’t believe that politics is practiced in a high-handed way.<\/p>\n
What do I mean? There are people who want to meet their commitments, their obligations to the state, to the government, and they can’t. And this is something that has been left over from the years of the crisis. So as long as that exists… is private debt a problem in Greece? If you look at it as a systemic issue, it is not. Because you have 121% of GDP private debt in the European Union, 94.5% in Greece. Red loans in banks are 3.3%. Last year we had \u20ac6.8 billion of regulations. So if you look at these, systemically we are in a much better place than the rest of Europe.<\/p>\n
But as long as there is one person, one family and one business that has a problem, their problem is our problem. That’s our job. So in that sense we have to build regulations that reward the punctual ones. And regulations that are workable. And I see the responsiveness that they have to people as well. The increase of the limit on the unencumbered account from 1,250 euros to 1,600 euros – I saw the messages on my mobile phone – was very much felt by a lot of people, as it concerns thousands of our fellow citizens.<\/p>\n
At the same time, the 72 instalments for old debts up to ’23 – after that the normal tax arrangement from the AADE applies – is something that people have been asking for.<\/p>\n
*On the Extrajudicial Mechanism, the Katseli Law and the Property Acquisition and Leaseback Agency*<\/p>\n
To me, the greatest tool we have for managing private debt is the Extrajudicial Mechanism, which we see people embracing. We have reduced the threshold for inclusion from 10,000 to 5,000 euros.<\/p>\n
But for me, you know, Mr. Filippidis, what is more interesting? We’ve been talking about the Katseli Law all these years. Has the Katseli Law worked? The Katseli Law, in my opinion, has not worked. Firstly, because it has trapped those who had to find a solution from the Katseli Law into a legal trap of too many years and has hidden a lot of people who should not have been subject to this Law, unfairly, behind its provisions.<\/p>\n
The out-of-court mechanism is now being turned into a tool to protect the first home. That is, we are allowing the citizen to set a perimeter of protection on the first home in the extrajudicial and say “this is what I care about.” Bigger haircut, smaller payment if you do. It’s much more effective for a person who really wants to protect their first home to be subject to it.<\/p>\n
Please look at this Property Acquisition and Re-leasing Agency, the Agency, which will be operational in the fall – we’ve been waiting for it for years, that’s true. But it’s a complicated project where there had to be a tender, there had to be a contractor in the tender. In the fall it will be able to be all up and running.<\/p>\n
All of these things together, it’s a much more effective tool than any we’ve had in the past. And when you put it all together, it’s the biggest private debt package since the crisis.<\/p>\n
This, in a country that is growing, reducing its unemployment and has a logic to emphasize that it should help those who are consistent, I think it’s the most beneficial thing we can do cumulatively. The provision will be voted on later this month. We will move very, very quickly.<\/p>\n
Basically, we have reformed the way the tax system works. We said we’re going to do the biggest tax cut ever, but it will have a philosophy: we’re changing the way we tax you based on how many children you have, your age and where you live (in terms of ENVIA). This had a very, very specific structure and philosophy: it recognizes that the demographic problem is the existential problem of Greece – I will tell you that it is the existential problem of Europe, not just Greece.<\/p>\n
At the same time, it recognizes that as far as the middle class is concerned, overtaxation continues to be a reality. Because we have cut 83 taxes and contributions now, we have to cut more and more and more and more. And as long as fiscal space is created, that’s the priority of this government and this prime minister, I’m removing burdens from the economy. So, we will continue in that direction because, first of all, we recognize that that is the most beneficial direction to take the economy forward.<\/p>\n
And, because you asked me before about the crisis, there is a revision in relation to the crisis in the Middle East, inflation is generally being revised up, growth is generally being revised down. You have seen and as far as we are concerned there has been a revision from 2.4% to 2%. Yes. But for next year the revision is upwards, it’s towards 2 percent when it was lower.<\/p>\n
This has to do with both the growth trajectory that the Greek economy has taken and the increase in public investment that is taking place and the additional European packages, but mainly the belief that – I flirt with the idea of saying it schematically – money is not there, it is being born. The economy has to give birth to money and that is the way we want to move forward in the next period. Mergers and acquisitions.<\/p>\n
So we are on a path of a qualitative change of what Greece is economically. And I think that by building on what has gone well before and by constantly improving ourselves, we will be able to conquer what the country can really conquer.<\/p>\n
I could talk a lot about all those measures that were put in during the years of the memoranda or the years of the crisis, which have to be removed, one after the other. I won’t hide from you, I have a long list of things that I would like to see removed quickly. But what is removed is a function of what you can remove. What is the fiscal space? Fiscal space is a function of the fiscal rules that we have in front of us. It’s not the surplus anymore, it’s that part of the surplus that I can spend within the fiscal rules.<\/p>\n
So, the amount we have for permanent measures, based on a prioritization that includes the obvious, let’s see what space we have. So a lot of the things you’re going to ask me about are on the table, I’m not going to confirm any of them. The catch is that we can actually get it done. Because, look at what the problem is. You say “take all the advance tax” (we collect about 8 billion euros). So, you have to see for the one year of the transition, what is the fiscal impact you will have from the implementation. You can’t do it all. Whatever you do, you have to do it with care and with measurement. A lot is achievable. On the strong foundations that have been built, even more will be done.<\/p>\n
I will say, I am glad that the entire loan component has been exhausted, because we are talking about 27.5 billion in total investment. But it is not going to recipients yet, 27.5 billion is total investment and there are 798 total contracts and 60 percent is for small and medium enterprises.<\/p>\n
‘So, if you look at it as a whole, it is very, very significant investment that will be made. Obviously, now there has been, as the deputy minister responsible, Mr. Papathanasis, has said, a picture there where we were struggling to get investment projects out of the drawers and once the deadline was announced, once the deadline was announced more came out. This is something that we are used to and we have seen many times in Greece.<\/p>\n
I will say that I am glad that these projects are there and I am glad that the banking system in cooperation with the Recovery Fund is financing them. I hope that many of them will be financed without the assistance of the Recovery Fund down the road, because many of these projects are also of excellent quality. But overall, I will say all of this is mobilizing investment.<\/p>\n
Many people say after the Recovery Fund, what? I will tell you that, on the one hand you have all the sovereign wealth funds, the increase in public investment that I said before, the new NSRF, the new funds that will come from Brussels. That is part of the answer.<\/p>\n
The fundamental answer is a change in thinking. The one that enables you to create European champions. To grow Greek businesses. To generate growth and money and economic object. And we are there. We are now on the verge of claiming to be there. Especially, compared to other European countries, which at this moment have a lower growth current. They see some things more fearfully. Greece is opening up. And the longer it continues in that direction, not only will jobs be created, because the historic low in unemployment. We’re about to catch it. We’ll be there soon. The issue now is not just to bring unemployment down further. The issue is better paying jobs. And I think we are close.<\/p>\n
The strategy must be primarily European. That is, there should be a mosaic of creating European champions, creating ecosystems around large companies that can play this role in global competition, and within this, Greece should find a position, the position that allows many of these companies to grow. I will not easily say that there are so few of them that can grow from Greece.<\/p>\n
I am much more optimistic in this exercise and in this analysis. And I think going into a broader strategy, a broader M&A puzzle increasing the scale in every sector of the economy, we will see a lot of Greek companies playing that role. And of course we will also see many, many companies in Greece becoming part of a European strategy, which – let me say – is much better. It is very, very healthy, it increases scale, it improves services and prices. All of this has a positive and multiplier effect.<\/p>\n","protected":false},"excerpt":{"rendered":"
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