Athens Digest 01.06.2018

• Greece still vulnerable after bailout; messages by Costello and Strauch

• Tsakalotos: Italy crisis “doesn’t worry” Greece

• Tourism leaders promised lower taxes by conservatives

• NBG and Alpha return to profit

# Senior Greece programme officials came to Athens to attend a financial conference and deliver a word of caution: The path back to markets remains difficult. “It will be very, very important that Greece continues to demonstrate, not just in the period up to the end of the programme, but actually in the critical period after the programme, that reforms are on track,” said EC mission chief Declan Costello. ESM Chief Economist Rolf Strauch also warned of post-programme vulnerability to crises like the one in Italy, and in an interview with the financial daily Naftemporiki, lowered expectations on debt relief. Additional relief, he said, would only be granted if really needed and when the programme is completed successfully.

# Euclid Tsakalotos says the crisis in Italy is not a cause of major concern for Greece, despite the bump in government bond yields triggered by the uncertainty. In a statement to the news website Newpost, the finance minister said investors were already aware that the Greek economy was improving. The Italian crisis, he said, “confirmed what left-wing economists have been saying for some time” _ that social reforms are needed urgently. Plans for a “clean exit” from the bailout would not need to be amended, he said.

# Opposition leader Kyriakos Mitsotakis has told Greek Tourism Confederation, SETE, that he plans to reduce VAT across the tourism and catering industry. Speaking at a general assembly, the New Democracy leader said a government led by the conservatives would be committed to reducing the general sales-tax rate from 24 to 22 percent and amend the reduced rate from 13 to 11 percent. He promised to return catering to the reduced rate and, budget-performance allowing, to scrap the overnight stay tax introduced for hotels earlier this year.

# Greece’s National Bank and Alpha Bank have swung back to profitability in the first quarter. NBG earnings from continued operations stood at EUR 20 million following losses of EUR 60 million in the previous three-month period. And Alpha reported January-March earnings of EUR 65.2 million, recovering from a fourth-quarter loss of EUR 64 million. Greek banks have been buoyed by positive stress test results as they race to deliver on targets to reduce non-performing exposures of bad loans and loans turning bad.

On our Radar: Capital controls eased
Capital controls are to be eased further, starting on Monday, with the monthly cash withdrawal limit for depositors per bank to increase from EUR 2,300 to 5,000. The Finance Ministry also announced that business payments abroad will be increased from daily limit of EUR 20,000 to 40,000. The controls were first imposed three years ago in the first term of Prime Minister Alexis Tsipras’ government. During a standoff between his government and rescue lenders, banks closed for three weeks, capital controls were introduced, a referendum on bailout measures was held, and eventually agreement on the third rescue programme was reached.