Athens Digest 20.11.2018

• No unpleasant surprises for Greece, says Moscovici

• Stournaras meets Mitsotakis for bad-loan briefing

• Half million more taxpayers fall behind

• Politico: Greece to lead EU joint spy school

# Budget 2019_ the revised version without pension cuts _ is expected to be tabled to parliament. At the same time, the European Commission’s will officially response to Athens’ proposals and present the country’s first enhanced surveillance report. But that, Pierre Moscovici confirmed last night, is not a problem. “The news is good. I won’t talk about the conclusions of the report but I will say one thing,” the EU Commissioner told reporters after a Eurogroup meeting, at which Greece was off the agenda. “First, the cooperation with the Greek authorities was very positive. And second, there won’t be any negative surprises.” Likewise, with Brexit and the Italian budget standoff to worry about, Mario Centeno, the Eurogroup President, appeared relieved to describe Greece as an emerging success story. He told reporters: “We are very much confident that the Greek government will continue the reform process and to deliver on commitments for the next and the following years.” (video here, scroll to 11.58)

# Central bank governor Yannis Stournaras continued a series of briefing on plans to reduce non-performing loans, meeting with opposition leader Kyriakos Mitsotakis. New Democracy officials said the party was seeking a “bold but fair” solution for the bad-loan crisis that has continued to put investor pressure on Greek banks. But the party made clear it would only make a public response to the Stournaras proposals after they are officially announced.
The central bank wants to use deferred tax assets to buy up bad loans _ that are nearly half the total _ in a venture worth as much as EUR 42 billion, using bonds from a special purpose vehicle.

# More than half a million more taxpayers have fell behind on their payments in one month, with two-thirds of Greeks and foreign residents now in arrears. According to official figures analysed by the Parliamentary Budget Office, the number of taxpayers in arrears surged upwards in September to reach 4.3 million (from 3.8 million in August) after both property tax (ENFIA) and solidarity charge payments were due that month. Some 2.5 million owe less than EUR 500, while a further 1.5 million owe between EUR 500 and 10,000.

# The defense ministers of 25 EU member countries agreed on a joint EU intelligence school, along with 16 other new projects, as part of their military pact. According to Politico, the big challenge will be to transform the projects from proposals into reality as many of the original PESCO projects, launched to great fanfare last year, have yet to get much beyond the drawing board. However, eyebrows will be raised by the proposal to have Greece lead the academy, with help from Cyprus, “meaning two of the EU’s members with the closest ties to Moscow would run the project.”

On our Radar: Hardship Imbalance
An income study gauging the impact of the Greek financial crisis shows that young members of the workforce were most seriously affected. The Athens-based Research and Policy Institute ‘Dianeosis’ found that income after taxes fell by 42 percent on average between 2009 and 2014, following a 14 percent increase over the previous six years. The drop was was slightly more severe for men, and hardest in the age category of workers aged 18-29, who saw a 44.8 percent drop. The drastic income reduction, far worse than the 26 percent loss of GDP, reflects the combined effect of the crisis and the sharp increase in taxes, according to the authors of the study. Significantly, university-educated employees lost a larger portion of their income than those without higher education (45 percent reduction vs 43 percent).