Athens Digest 30.04.2019

• Greece misses S&P upgrade, expects huge primary surpluses and accepts lower growth target

• Mitsotakis makes investment-grade pledge

• China eyes banking presence in Greece

• Bruegel’s Darvas: Clock ticking for tax fix

# Greece missed out on a widely anticipated sovereign upgrade, as Standard & Poor’s held the national rating at B+ with a positive outlook. The government, meanwhile, submitted its National Reform Programme to the European Commission under the European Semester framework, accepting its forecast for 2.3 percent growth in Greece this year _ down from a budget prediction of 2.5 percent _ and easing to 2 percent by 2022. The government said that primary surpluses will remain over 4 percent in the same period.

# Missing an upgrade from S&P means that Greece is still four notches below investment grade, but the country’s opposition leader has promised to swiftly fix the problem if elected prime minister this year. “(We will) return to investment grade within 18 months,” Kyriakos Mitsotakis told Politico’s Playbook, again expressing certainty at election victory. The New Democracy leader repeated pledges to slash taxes for the middle class, simplify regulation, and bring in a barrage of business-friendly measures. He added a commitment to merge and restructure anti-corruption agencies. “I will consolidate the fight against corruption, (creating a) truly independent anti-corruption agency,” he said.

# Greece’s Foreign Minister George Katrougalos said that there is an interest in setting up a Chinese banking presence in Greece as part of ambitious plans to expand trade between the two countries over the next three years. “It seems that the establishment of a Chinese bank in Greece is on a good path,” he noted. Katrougalos accompanied Prime Minister Alexis Tsipras on his trip to China last week as part of the country’s Belt and Road Forum initiative. In Beijing, Tsipras met with Chinese President Xi Jinping, and Prime Minister Li Keqian, as well as senior government officials and business executives.

On our Radar: Time to fix the roof 
Greece must press ahead with tax reforms needed to sustain its recovery while external conditions remain favourable, the chief economist of the Brussels-based Bruegel Institute has argued. Zsolt Darvas told the Athens News Agency in an interview that additional reforms should be made before the next batch of loans mature in three to four years’ time. “Taxes are very high in Greece while the tax base is very small … those who pay are subject to very high rates,” Darvas was quoted as saying. He backed the notion of easing taxes while broadening the base. He also supported Athens’ effort to repay IMF loans early.