European Stability Mechanism (ESM) chief Klaus Regling on Tuesday said a reduction in Greece’s tax rates could be combined with an expanded tax base, a long-standing recommendation by the country’s creditors and international organizations, such as the OECD and IMF.
At the same time, he warned that any modification of fiscal policies must be towards the direction of boosting growth, while again saying that fulfilling agreed to primary budget surplus targets should be guaranteed.
Regling, who on Monday met in Athens with new Greek Finance Minister Christos Staikouras and will be received by Prime Minister Kyriakos Mitsotakis on Tuesday afternoon, spoke at the 23rd Economist roundtable with the Greek government, which is again taking place at a seaside resort southeast of the Greek capital.
Another highlight of the ESM managing director’s address is that whatever fiscal “space” is achieved in the execution of the Greek budget should be utilized for “productive spending”, such as public investments.
In describing the Greek government’s course over the previous period, he underlined that implementation of reforms “has slowed” over the last few months, while policy measures linked to commitments given by the previous Tsipras government to creditors failed to have the desired effect.
Regling said certain reforms have back-tracked, while arrears owed by the state to the private sector are higher than forecast.
