Athens Digest 13.11.2018

• Germany’s Scholz says Greek government moves wisely but talks on pensions aren’t over yet

• Strauch (ESM) cautious on pensions and cash buffer

• Hot Property: House prices advance out of slump for third quarter

• Court rules against tax on unpaid invoices

# German Finance Minister Olaf Scholz has steered clear of the debate on Greek pensions in public comments made following his weekend meeting in Berlin with Prime Minister Tsipras. Reportedly, Scholz told foreign correspondents in Berlin that the Greek government is moving wisely. “Everything was done in a good way, very wisely and was seriously prepared after a dialogue with the European Union. We are just before the end of these talks, but we are not there yet. We are assessing the numbers” he said.

# The ESM’s chief economist has appeared cautious on the issue of Greek pensions, with less than a week until the Eurogroup is expected to weigh in on the issue. “There is the understanding that previous commitments under the ESM programme should be respected or discussed with the institutions,” Rolf Strauch told Cyprus’ Politis newspaper. “But we are currently going through that process.” Strauch praised Athens’ commitment to maintaining a 3.5 percent primary surplus and expressed confidence in the country’s Public Debt Management Agency and its ability to identify the correct timing for Greece to return to the market. Asked if the cash buffer can be used to support the Greek banking system, he said: “It wasn’t designed for more than servicing the country’s debt obligations (…) To use it for other purposes would require a decision by the ESM governing bodies.”

# Greece’s property market is continuing to emerge from its extended slump, with prices climbing for a third straight quarter. The Bank of Greece said apartment prices rose 2.5 percent in third quarter from the previous year, gaining momentum following a second-quarter increase of 1.2 percent. The impact of property taxes had previously hindered the real estate recovery. In Athens, where demand from tourism and short-term rentals has surged, the increase was the most pronounced, at 3.7 percent in the third quarter. Thessaloniki and other Greek cities were behind the national average, at a respective 1.9 and 1.2 percent.

# A panel of senior judges has ruled that a tax on unpaid invoices is unconstitutional, but the decision is not yet final. The 25 percent levy is a major headache of many businesses in a country with a high number of bankruptcies and level of business debt. The seven-member panel of judges which issued the ruling against the retroactive taxation of bad debts, referred the case to a plenary session of the Council of State. No date has been set for that hearing.

On our Radar: Flash of Consensus?
Rival Greek political parties seldom advertize issues of cross-party consensus, but a new study has found that, in practice, the divide between opponents has narrowed in recent years. The Athens-based Center for Liberal Studies, KEFiM, analysed parliament votes over the past three years (2015-2018) and the previous three (2012-2015), during which Syriza and New Democracy traded places as governing and main opposition parties. While in opposition, New Democracy backed 57 percent of draft legislation, while the Syriza opposition had only supported 21 percent. The authors said agreement was most common on issues of foreign policy and defence, and attributed the shift towards consensus to a weakening of the pro-bailout/anti-bailout divide among lawmakers.