Athens Digest 21.05.2019

• High court reportedly backs 2012 salary cuts

• Primary balance hit by weaker collection, higher spending

• Conservatives cement lead

• Fitch issues warning over handouts… 

• …But PM says more may be on the way

# The Council of State has reportedly backed a 2012 law scrapping annual salary bonuses for civil servants, overturning an earlier ruling. Annual salaries were previously divided into 14 payments with additional money given out at Christmas, Easter and the summer holidays, but the practice was partially abolished as a way of imposing pay cuts. Although the decision was reported by state-run and private news media, the chair of the Council of State, Aikaterini Sakellaropoulou, criticised the leaks, stressing that the ruling would only take effect after being published. While referring to inaccuracies in some of the reporting, she did not comment on the substance of the ruling.

# Parliament’s Budget Office says weak tax collection and increased spending in the first quarter of the has taken a toll on public finances, adding to the anxiety over Greece’s commitments to creditors. “The state primary cash balance is reduced by EUR 436 million. On the revenue side, ordinary tax revenues were EUR 518 million lower and public investment budget revenues EUR 178 million lower,” the report said. Revenues at local government and from social security funds in January-March were also lower on the year, while an increase in the stock of general government arrears had a further negative impact. (link in Greek here)

# New Democracy keeps strong lead according to the two latest polls released yesterday. Five polls have been published in the last three days putting the conservatives ahead. The main opposition party has 6.3-point lead over ruling Syriza, according to Alco poll while Rass poll finds a stronger lead by 8.5 percent, The Alco poll for Open TV gave ND 29.9 percent, with Syriza trailing at 23.6 percent, followed by the Movement for Change and Golden Dawn at joint third with 5.7 percent and the Greek Communist Party at 5 percent. Undecided vote is monitored up to 12.7 percent The Rass poll for Action TV gave ND 31.7 percent, Syriza 23.2 percent while it finds that Movement for Change is third (8.7 percent) ahead of Communists (6.7 percent) and Golden Dawn (6.4). Rass shows a 9.4 percent of undecided voters.

# Fitch has warned that fiscal measures recently announced by the government are hurting the country’s economy and prospects of a sustained recovery. “Tensions between Greece and its creditors are likely to increase. The consequences are unclear, but a sharp escalation could have an impact on Greek public finances,” Fitch said. Creditors, it said, could block Greece’s bid to repay IMF loans early and halt the payout of profits from Greek bonds held by euro area central banks. The measures, the agency said, appeared to be motivated by election campaign considerations.

# Despite the warnings, Prime Minister Tsipras said additional relief measures could be introduced later this year. Speaking in a radio interview, Tsipras said additional budget capabilities would become clear later in the year. “The amount paid for the 13th pension was EUR 980 million … and equivalent to an Easter or holiday bonus. When we determine that the economy has a stable budget capability, our goal is to be able to give the corresponding amount as a Christmas bonus,” he said. “We’ll know this at the end of the year.”

On our Radar: Athens’ living improves but…
Athens has risen four places on Deutsche Bank’s annual global prices and living standards index of 50 cities and is now in 34th place (was in 38th last year). The Greek capital performed well in the cost of living index, property price to income ratio, traffic commute time, and pollution and climate, but poorly in health care, safety, and purchasing power. Leading the global rankings were Zurich, Wellington, and Copenhagen, while the three cities at the bottom were Manila, Beijing, and Lagos.