Athens Digest 10.07.2018

• Atlantic trip to gauge markets, amid caution from Brussels

• It’s… complicated: Draghi on Greece’s waiver and QE prospects

• Targeted tax cuts worth EUR 750 million promised for 2019

• Athens to host talks for drug-pricing pact

# Greece’s pitch to investors following its landmark agreement with rescue lenders continues in the United States. Finance Minister Euclid Tsakalotos and his deputy George Chouliarakis have lined up meetings in New York and Boston through Wednesday. Despite its cash buffer and with 10-year yields still near (but now below) 4 percent, Athens is reportedly keen to test the markets and is gauging support for another litmus-test bond issue. Lenders are more cautious. “Greece has no financial need to tap the market in 2018, but could do so to send a message (to markets) if a good opportunity presents itself,” a senior creditor-institution official said, describing the perspective from Brussels.

# ECB President Mario Draghi has cautioned that Greece may not qualify for the QE programme after the bailout ends in late August. Speaking at the European Parliament (video here – time: 20.15), Draghi said that decisions would be made following a separate debt sustainability analysis. “The issue is that before we can do our own DSA with respect to this question, we have to wait for the answer by the various parliaments that to have to approve the decisions that have been undertaken by the Eurogroup and then we have to wait for the decision of the board of the EFSF, Only thereafter can we consider doing the debt sustainability assessment,” he said.

# Targeted tax cuts worth EUR 750 million have been promised for 2019, in a pledge renewed by the prime minister last night. Speaking at an industry federation event in Thessaloniki, Alexis Tsipras said he was confident the government’s strong budget performance would continue, allowing for measures to ease the impact of additional austerity planned for that year. “In 2019, there will be fiscal space of some EUR 860 million, and the government is committed to targeted tax cuts of around EUR 750 million,” he said. The Prime Minister also defended the proposed Macedonia-name agreement, arguing that opponents had deliberately “distorted” the terms of the deal.

# Members of a southern European alliance formed to jointly negotiate drug prices are to meet in Athens this week. Officials from the 10-nation Valletta Declaration countries will begin two-day meetings in Athens today. The health ministers of Cyprus, Greece, Italy, Malta, Portugal, and Spain launched the initiative in Malta’s capital Valletta last year and were later joined by EU members Croatia, Romania, Slovenia, and Ireland, while France has participated as an observer. According to the Greek Minister Andreas Xanthos, two basic issues are going to be discussed. “The first is to ensure that companies have an incentive to participate in the deal. This incentive is the secured and quick access to large markets without waiting for each country to make its own assessment and negotiation. And the second is to ensure the legal commitment of the process and its results,” he said to Naftemporiki newspaper. At stake in the negotiations is keeping pharmaceutical companies committed making new medicines fully available in countries with small markets, like Cyprus and Malta.

On our Radar: Higher stagnation
University graduates in Greece have the worst chances of finding a job, according to a new study. The survey by the Foundation for Economic and Industrial Research (IOBE) found that just 66 percent of Greek graduates were employed last year, compared to an EU average of 78 percent _ with the numbers steadily worsening during the crisis, between 2009 and 2017. It also found that, although wages in the public sector suffered a stepper fall, they still remained higher than the private sector average (EUR 1,077 vs EUR 884 per month). According to the survey, gender income inequality still remains an issue compared to 2008 although the economic crisis has affected more men’s than women’s wages.