Athens Digest 01.05.2018

• OECD praises Greek progress but red-flags poor business environment

• Foreign Minister Kotzias: ‘Calm’ approach to Turkey eased tension

• Education Minister rules out allowing non state owned universities and announces plans for grade-based entrance system

• Tax study finds system “unfair and dysfunctional”

# Jose Angel Gurria, secretary-general of the OECD, traveled to Athens for the release of the Economic Survey of Greece 2018 and praised the country’s effort to modernise its economy. At the same time he urged Greece to continue with reforms after its third international bailout expires in August and called the country’s creditors to provide a debt relief. Gurria met PM Tsipras, and noted that implemented reforms had finally begun to have an overall positive effect on the economy as it showed clear signs of recovery.

# According to the report, Greece is expected to grow by 2 percent this year, slightly lower than the European Commission forecast of 2.5 percent. The OECD says that recent reforms have improved the business environment but it remains poor – the poorest in the “Doing Business Report.” It also mentions that only a 5 percent of the 350 regulated professions have opened up to completion. You may find the OECD Economic Survey of Greece 2018 here.

# Foreign Minister Nikos Kotzias says a decision to deal with hostile actions from Turkey in a “calm and composed” way has helped avoid a dangerous escalation of tension in the Aegean Sea. In an interview with Skai television to be aired tonight, Kotzias said Ankara had “come close” to crossing red lines on several occasions including an incident in February when a Greek coast guard patrol boat was rammed near the disputed islets of Imia. “If we, the Greek side, hadn’t adopted a calm and composed approach no one can say where that incident could have led us,” Kotzias said.

# Costas Gavroglou, the Education Minister, has ruled out allowing private or independently run universities, and announced plans overhaul to the exam system for places in higher education. In a newspaper (Ta Nea) interview, the minister described the proposals backed by the conservative opposition to create private universities as an “ideologically driven effort to create a customer-student.” Gavroglou announced plans to create grade-based university entrance system, phasing out the current National Exam.

On our Radar: An “unfair and dysfunctional” tax system
Greece’s tax system remains “complicated, unfair and dysfunctional.” A study by the think-tank Dianeosis and the Foundation for Economic and Industrial Research, IOBE, found that despite 27 percent drop in GDP between 2008 and 2016, tax revenue only declined by 7 percent due to a dramatic increase in taxation. Between 2001 and 2015, 36 new tax laws were brought into effect in Greece. Indirect taxes have increased by 94 percent since 2008.Within the same period, property tax revenues have increased sevenfold.