Athens Digest 05.07.2019

• Tsipras confirms July 7 elections and plans to submit legislation to revoke reduction of tax free threshold

• Greek economy growth slows down in Q1 of 2019

• BoG: Weighted average interest rate rises on new loans in April

• Greece reiterates war reparations demand from Berlin

• Prosecutors union calls for withdrawal of reformed penal code bills

# In his first interview since his ruling SYRIZA party suffered heavy defeats in European, local and regional elections, Prime Minister Alexis Tsipras confirmed yesterday that early national elections “will take place on July 7.” Speaking to state TV last night, Tsipras also said he will submit legislation to Parliament before it is dissolved for elections in order to revoke a reduction the tax-free  threshold which is planned for January 1, 2020. “It will be tabled next week,” he said. He claimed that the European Institutions and Greece’s partners are aware of his government’s decision. “We have registered it in the Stability Program and submitted it to the EuroWorking Group,” he said.

# The Greek economy grew by a mere 1.3 percent of GDP in the first quarter of the year, according to figures released by the country’s statistics service ELSTAT yesterday. It follows a slowdown of growth (1,5-percent) in the fourth quarter of 2018 which came after a growth of 2.1-percent in the third quarter. The government is targeting growth this year to the tune of 2.3-percent while the EC expects a rate of 2.2-percent (instead of the previous forecast of 2.3-percent). The Bank of Greece and the Foundation for Economic and Industrial Research (IOBE) have predicted a maximum rate of 1.9-percent.

# The overall weighted average interest rate on new deposits remained unchanged in April, 2019 at 0.28-percent, while the corresponding rate on all new loans to households and non-financial corporations increased by 37 basis points to 4.93-percent, according to the Bank of Greece. The spread between loan and deposit rates increased to 4.65 percentage points.

# Greece’s prosecutors union has called for the withdrawal of the reformed penal code that was submitted to Parliament on Monday by the Ministry of Justice. The union protested that several of its provisions stipulate lenient treatment of offenders. It noted that several felonies – such as serial thefts and fraud – are being downgraded as misdemeanors. Moreover, prosecutors said the new code calls for the reduction of existing limits on sentences for certain crimes which would  lead to “mass releases for a plethora  of  cases, which, they said, would put “public safety at risk and cultivate the impression among victims of crimes that impunity rules.” Prosecutors said the bribery provisions for bribery of politicians did not go far enough and would inevitably lead to the expiration of cases under the statute of limitations.

# Greece’s Ambassador to Berlin handed the German Foreign Ministry a so-called note verbale reiterating Greece’s demand for reparations for war crimes committed in WWI and WWII, the Greek Foreign Ministry announced yesterday. The note said it was a “moral issue” and urged Berlin to begin negotiations. More specifically, Greece is demanding damages “for the losses suffered by the Greek people” as well as the “the repayment of the occupation loan and the return of the looted and illegally removed archaeological and other cultural treasures.” The move follows the approval in April by Greek Parliament of a proposal of a House committee to formally seek reparations. Berlin has repeatedly dismissed such demands, saying there is no basis for them.

On Our Radar: KPMG research shows that Greek CEOs have mild growth expectations and are less flexible 

According to research conducted KPMG International on the Global Outlook of CEOs in 2019, more than half of Greek CEOs (53-percent) anticipate mild growth rates of up to 2-percent over the coming three year period. Moreover, it showed that Greek CEOs have less belief in flexibility compared to global trends. According to the research, while 67-percent of CEOs globally believe that flexibility is their most important asset in facing new challenges (so as not to be left out of the market), only 32-percent of Greek CEOs say the same. The research also showed that despite the global trend, Greek CEOs do not prioritize for climate change.