Greek Finance Minister Euclid Tsakalotos this week promised a further relaxation of capital controls, in an interview to “N”, his first after the country’s exit from the third memorandum bailout last month.
Moreover, in commenting on the political “hot potato” held by his leftist-rightist coalition government, namely, a scheduled social security spending reduction that the former desperately wants to avoid, Tsakalotos merely noted that “this discussion is underway”.
The previously UK-based economics professor and his top aides at the finance ministry have eschewed the very high-profile statements by other ministers over the recent period, as well as PM Alexis Tsipras, on prospects of persuading creditors, especially the IMF, that the coming austerity measure is unnecessary and will dampen Greek economic growth.
The latest pension cuts are due to come on line as of Jan. 1, 2019, something that the Tsipras government agreed to with creditors in 2016 – a year after the third bailout was signed – and then ratified via a slim Parliament majority backing the coalition. Nevertheless, 2019 will witness local government elections in the country, a poll for the European Parliament and a general election, unless Tsipras declares a snap election earlier.
Asked about Berlin’s position on the issue of pending pension cuts, Tsakalotos replied:
“We’re now operating within a framework based more on persuasion than imposition”.
Turning to the poll-leading main opposition New Democracy party (ND), whose leader, Kyriakos Mitsotakis, is expected to unveil much of his center-right party’s economic platform on Saturday from Thessaloniki, Tsakalotos asked where the tax and social security contribution cuts promised by the latter will come from.
He also criticized Bank of Greece (BoG) Gov. Yannis Stournaras, another “thorn in the side” of the mostly leftist coalition government since 2015, for the latter’s insistence on a precautionary credit line for the country in the post-bailout period. Tsakalotos and other top ministers had sternly opposed such a credit line, saying it amounted to another unofficial memorandum.
Additionally, he maintained that “fiscal space” in 2019 will be greater than the 700 million euros forecast in a medium-term program, essentially repeating optimistic predictions by the government that primary budget surplus targets for 2018 and 2019 will exceed the already ambitious 3.5-percent of GPD figure promised, in writing, to creditors.
Also, the finance minister said Tsipras’ pledge to reduce property taxes will manifest itself into an average 10-percent reduction in the overall tax (ENFIA) for 2019, and up to 30 percent for 2020 – a year after general elections in 2019.
At the same time, Tsakalotos declined to offer an opinion on when the best time will be next year to hold general elections.
The latest time when general elections can be held is in October 2019, whereby municipal/regional and EP elections will have taken place months earlier.
