Grabbing a coffee for 20 cents less doesn’t really sound like the start of an economic recovery but who knows, maybe after this week’s decision to cut value added tax at restaurants and cafes, Greece will soon be measuring out its success with coffee spoons.
Naturally, the government has made the most of the skeptical troika finally giving in on a longstanding Greek demand for VAT in the food service sector to be reduced from 23 to 13 percent. Even so, Prime Minister Antonis Samaras announcing the temporary measure in a televised address was a touch excessive given he only informed the nation that a nightclub drink would soon be about 50 cents cheaper. For the government, though, the symbolism of the reduction is perhaps more important than its economic impact.
Samaras presented it as a personal triumph of persistence. Deputy Prime Minister Evangelos Venizelos said it was a sign that the troika had begun listening to Greece. Indeed, the VAT reduction represents something of a milestone in the Greek bailout program as tax hikes have been the norm and a regular source of much anger over the last three years. It was billed as the first tax cut since the program began, which is not quite accurate. Technically, it was the second as a 15 percent reduction in the emergency property tax introduced in 2011 had been agreed a couple of months earlier. This came after pressure from Democratic Left, which was still part of the coalition at the time. There was no televised address, though.
Posted in Economy, Greece, Greek politics
Tagged Antonis Samaras, Company tax, Greece, Greek bailout, Greek crisis, Greek economy, Hospitality, Restuarants, Tax, Tourism, Troika, VAT
Greece’s first major privatization since the crisis began, secured on Wednesday when a private consortium agreed to buy a 33 percent stake in state gambling monopoly OPAP, will bring some relief to the government and its lenders. Athens has been under pressure since the start of its bailout program three years ago to sell state assets so it could raise revenue and pay off some of its mounting debt. Privatization even caused the first major rift between the troika and Greece, when the country’s lenders announced a 50-billion-euro sell-off program in February 2011 before the government.
The target for privatization revenues has since been revised downwards, first to 19 billion euros and then 11 billion euros by 2015. The pressure, however, has not decreased. The sale of the stake in OPAP to Emma Delta for a total of 712 million euros will give the Greek government some breathing space but the troika expects to see more sell-offs soon as more than 2 billion has to be raised this year.
Much has been made of how Greece has dragged its feet, failing to kickstart the privatization process quickly enough. The country’s privatization agency (HRADF) has also been slammed for lacking organization, with one analyst recently labeling its efforts as “simply not up to par on any international standards.” The fund has also been blighted by several changes of leadership.
Posted in Economy, Greece
Tagged Greece, Greek assets, Greek bailout, Greek economy, Greek privatizations, HRADF, Ioannis Kapodistrias, King Otto, OPAP, Privatization, Troika
The leaders of Greece’s coalition parties are due to meet on Wednesday, a day before the troika returns to Athens to resume its latest inspection of Greek public finances and check on the progress of structural reforms. Reports indicate that among the subjects which will dominate both Wednesday’s talks and subsequent meetings with officials from the European Commission, European Central Bank and International Monetary Fund are the collection of an emergency property tax and installments for unpaid debts to the state.
The talks will take place in the wake of Eurostat figures showing that Greece, for the first time since the crisis began, has the highest unemployment rate (26.4 percent) in the euro area. At the same time, Greece’s leading economic think-tank, IOBE, warned that the current rate of unemployment in this country is unsustainable and that 60 percent of jobless people had been without work for at least 12 months. Also this week, Markit’s PMI showed that manufacturing in Greece, which accounts for almost 15 percent of the economy, continued to fall in March as it has done since September 2009. Meanwhile, the Finance Ministry has reportedly revised this year’s recession figure to 5 percent of GDP from 4.5 percent.
To say that the talks between Greece and the troika will have a touch of the surreal about them given the mauling that the real economy is suffering is probably an understatement.
Posted in Economy, Greece
Tagged Austerity, EU, euro, Greece, Greek bailout, Greek crisis, Greek economy, Greek manufaturing, Greek property tax, Greek taxes, Greek unemployment, IMF, Troika