Athens Digest 29.05.2019

• Varoufakis’ party misses comeback, seat goes to conservatives

• Second thoughts on Greece report due to snap election on July 7

• Goldman Sachs: July election may help market full market return

# With more than 99 percent of EU election votes counted in Greece, Yanis Varoufakis’ Mera25 party has narrowly failed to win a seat. The former finance minister’s political comeback was thwarted in the final hours of the ballot count after the party tally dipped just below the 3 percent threshold. The lost seat will go to New Democracy and the European People’s Party, with Theo Zagorakis, captain of Greece’s winning football team at the 2004 European Championships, likely to return to the European Parliament. New Democracy increased its number of seats to 8.

# Greece’s third enhanced surveillance report may not be published next week due to the snap general election. Institutions are reportedly concerned that publication of the assessment _ likely to be critical _ could be viewed as interference in the election campaign. They have reportedly found a yearly fiscal gap of some 0.8 percent for 2019 to achieve the primary surplus target of 3.5 percent of GDP. The issue of publication is due to be considered at a Euroworking group meeting on Monday as many insist that Greece, like all member states, should follow the normal European Semester cycle regardless of elections. Dimitris Tzanakopoulos, the government spokesman, said that the vote would be held on July 7.

# Goldman Sachs says the Greek snap election is seen as positive, cutting short uncertainty and with the favourites to win, New Democracy, less likely to reverse reforms. In a briefing note, the investment banking giant noted the positive market reaction to the news of an early poll and the likelihood of improved borrowing rates in bond markets _ helping Greece’s full return to markets. Following the election announcement, shares in Canada’s Eldorado Gold sharply increased by more than 16 percent, as investors hoped a spat between the Greek government and the Vancouver-based firm may be resolved.

On our Radar: Stournaras’ Welfare Warning
Bank of Greece Governor Yannis Stournaras says a bigger private sector contribution to the health and pension system could help the country cope with rising costs that will be produced by its rapidly aging population. Speaking at an insurance conference in Athens, Stournaras also identified recent court decisions overturning bailout-era cuts as a threat to the sustainability of public finances. “Private insurance can contribute to a sustainable growth model for the Greek economy, by increasing productive investment,” he said.