Athens Digest 08.07.2019

• ND secures strong mandate with clear election victory

• Panos Tsakloglou: Main bet for the new government is to accelerate growth and… convince country’s lenders

• Eurogroup to stress the need for Greece to honor its commitments

• EUR625m of three-month T-bills to be auctioned on Wednesday

Kyriakos Mistotakis’ New Democracy party won a convincing victory in Greece’s general election yesterday which allows him to form a majority government in a six-party Parliament. With 99.83 percent of votes counted, ND won 39.85 percent and 158 seats in a 300-seat parliament. Extreme right Golden Dawn was left out Parliament with 2.93 percent below the 3-percent threshold.


New Democracy, 39.85 percent (158 seats)
Syriza, 31.53 percent (86 seats)
Movement for Change (KINAL), 8.10 percent (22 seats)
Communist Party (KKE), 5.30 percent (15 seats)
Greek Solution, 3.70 percent (10 seats)
MeRA25, 3.44 percent (9 seats)
Golden Dawn, 2.93 (0 seats)

# Asked by the Athens Digest which are the immediate challenges for the new government and how it and Greece’s partners should deal with them, Panos Tsakloglou, a professor at the Athens University of Economics and Business – and  country’s former  representative at the EWG,  stressed: “The main bet for the new government is to accelerate growth.  They plan to achieve it through tax cuts and the implementation of structural reforms aiming to create a more business friendly environment.  Both are desirable, but the former faces the problem that Tsipras has already exhausted all fiscal space available and, hence, tax cuts can only be implemented either if fiscal savings are found elsewhere in the budget or if the 3.5 percent of GDP primary surplus target is lowered.  For that Mitsotakis will need to convince our lenders – not the easiest task on earth, but certainly worth-trying.”

# The Eurogroup today will discuss the third enhanced surveillance report for Greece even though a new government will not have been sworn in. Eurozone Finance Ministers are expected to stress the need for Greece to meet its fiscal targets and honor its commitment to implement pending structural reforms and privatizations. The institutions are expected to reiterate their objections to the package of benefits granted by the outgoing leftist government before European elections in May which will threaten to derail the primary surplus target of 3.5-percent of GDP this year.

# The Public Debt Management Agency (PDMA) will auction 13-week treasury bills amounting to EUR625 million on Wednesday. The settlement date of the new T-bills will be on Friday. Only primary dealers will be allowed to participate and no commission will be paid. The PDMA said that primary dealers can submit non-competitive bids for up to an additional 30-percent of the auctioned amount until July 11.

On Our Radar: Majority of Greek executives say gov’t change will favor economy
Nine out of ten CEOs believe that the change in government will have a moderate to high positive impact on the country’s economic performance, according to a survey by the Association of Chief Executive Officers (EASE). The survey also noted a strengthening of the general economic climate index (EASE/ICAP – CEO General Index) to 171 points in the second quarter of 2019 from 156 in the previous quarter. The survey which used a sample of 3.020 CEOs and managing directors of the largest Greek companies was conducted by EASE in cooperation with the ICAP group between June 14 and June 30.