Athens Digest 08.04.2019

• Eurogroup approves disbursement as Athens commits to tax reform, privatizations, NPLs reduction in 2019

Greece will seek to repay expensive IMF loans

Latest poll: ND enjoys double digit lead over SYRIZA ahead of Euro elections

# Eurozone finance ministers approved the disbursal of EUR 973 mn due to Athens on Friday, with the Greek government committing to implement a series of prior actions by the end of 2019. Among these are the reduction of the tax-free ceiling, privatizations and decreasing NPLs. The Eurogroup welcomed the reaffirmation by Greece to “continue implementing basic reforms, mainly the expansion of the tax base and other tax reforms.” Speaking to the Athens Digest, George Pagoulatos, Professor of European Politics and Economy at the Athens University of Economics and Business (AUEB), and Visiting Professor at the College of Europe in Bruges said “the Eurogroup confirmed the persistent focus on their priority areas of reform: broadening the tax base by reducing the minimum tax-free threshold, cleaning-up non-performing bank loans, privatization, public sector reform.”  “Even though the government seems to be given some leeway in view of the elections, the institutions will certainly return to demand more tangible progress on these areas,” Pagoulatos added.

# Greece now aims to repay costly IMF loans after the ESM’s Klaus Regling gave the green light on Friday. “We know that a certain part of the IMF debt is particularly expensive. Out of the EUR 9.5 billion outstanding to the IMF, for one-third, or EUR 3.5 billion, Greece has to pay an interest rate of almost 5-percent, so that’s substantially higher than what Greece pays on the markets. Therefore, also from the ESM perspective, it would make sense to repay that because it would strengthen Greece’s debt sustainability,” he said. According to the Greek finance ministry, the intention of authorities is to use part of the cash reserves accumulated due to the fiscal over performance over the last four years for early repayment of the most expensive portion of state borrowing in the official sector. The Finance Ministry expects the primary surplus of 2019 to close at 3.9-percent. Greece is reportedly already preparing for a new market foray.

# Opposition New Democracy (ND) enjoys a 10.8-point lead over ruling SYRIZA ahead of European Parliament elections on May 26, according a poll by the Marc company published on Saturday in the Proto Thema newspaper. More specifically, 29.4-percent of those polled said they will vote for the conservatives against 18.6-percent for the governing leftist party. The center-left KINAL alliance was in third with 6.7-percent, ahead of the extreme right Golden Dawn party with 5.4-percent and communist KKE with 4.7-percent.  Almost 5-percent (4.8) said they will not vote while another 17.7-percent was undecided. In the same poll, ND has a 9.1 point lead over SYRIZA with regard to voter intentions in national elections this year.

On Our Radar: Greece a laggard in digital economy 
Greece along with Romania is last among the European Union’s 28 members in terms of progress toward a digital economy, according to the Report of the Governor of the Bank of Greece for 2018. The report noted that the country’s faster transition to the digital era could lead to a high and sustainable growth rate over the medium to longer term. The rate of digitization for Greece, as measured by the Digital Economy and Society Index (DESI), remained low between 2015 and 2018 compared to the European average, the report said.