Athens Digest 12.04.2019

• Regling: Greece on the right track provided that it remains committed to agreed reforms

Government says draft legislation revising installment schemes will be brought to parliament by the end of the month

Two-year term renewed for top corruption prosecutor

# Klaus Regling, the ESM managing director, says Greece is on the “right track” towards a lasting recovery but cautioned that maintaining reforms is essential. “Greece is also on the right track – provided that the country remains committed to implement the agreed reforms, he said. Speaking in Washington, Regling highlighted that the fund had provided a stabilizing effect in the euro area, having paid out EUR 295 billion in low-interest loans to bailout-programme countries. “In the case of Greece, the budget saves around EUR 12 billion annually in interest payments, which is almost 7 percent of Greek economic output,” Regling said. He cited the Greek example to argue in favour of providing assistance only in return for “deep reforms.” A decade after the global financial crisis, Regling said: “Monetary union is now more stable and better prepared for the next crisis than a decade ago.”

# Draft legislation will be brought to parliament by the end of the month introducing a 120-installment scheme allowing people to ease the repayment of debts to social security and insurance funds. Visiting Thessaloniki, Labour Minister Effie Achtsioglou said the new scheme would carry a minimum monthly payment of EUR 50, adding that: “This will provide relief to tens of thousands of people at pensionable age who have fulfilled conditions to begin their retirement but cannot start to receive a pension due to debts.” Greek Authorities had provided assurances to lenders that installment schemes would not be revised without further technical analysis. In the enhanced surveillance report published in February, European institutions noted: “It is important to avoid negative risks to public revenues and to safeguard the payment culture, as these were core objectives of the reforms in public revenue collection.”

# A panel of Supreme Court judges has renewed the two-year term of the country’s top anti-corruption prosecutor Eleni Touloupaki. They voted in favour of the controversial prosecutor as a major investigation into the corruption scandal surrounding Swiss drugmaker Novartis nears its conclusion.

On our Radar: High taxes, squeezed middle class
The global squeeze on the middle class has been acutely felt in Greece, according to a survey by the OECD. Middle-class household income in Greece fell annually by some 6 percent in the decade after 2008, the Organisation for Economic Co-operation and Development said. Households making just EUR 8,000 per year in Greece are considered to be middle income, compared to nearly EUR 18,000 in Germany. A separate survey (Taxing Wages 2019) by the OECD found that the tax wedge for a single worker in Greece averaged 40.9 percent in 2018, well above the OECD average of 36.1. Greece had the 13th highest tax wedge among the 36 OECD member countries, compared to 15th place in 2017.