The OECD issued its own “warning bell” on Tuesday, a day after Fitch ratings expressed its concern, over the possibility of a fiscal “hiccup” by Greece in 2019, in touching on this month’s sudden relief package by the poll-trailing Tsipras government.
According to a report by the Organisation of Economic Co-operation and Development, the recent measures – such as a reduction in the VAT rate of certain products – will translate into lower tax revenue.
At the same time, the partial reinstitution of a social security bonus, dubbed the “13 pension” by the hard left government, means increased state spending.
While the measures constitute the first real relief from the “tax tsunami” unleashed by the Tsipras government in 2016-17 in order to meet creditor-mandated annual fiscal targets, the OECD appeared unmoved, saying the mid-year announcement “undermines” the fiscal credibility of Greece.
