Athens Digest 24.07.2019

• Government rules out lowering tax threshold and announces EUR 1.5bn savings

• Demand for loans growing but conditions remain unchanged

• Government wants gold investment restarted

• Piraeus Bank’s Megalou: Bank “focused on all opportunities for recovery” 

# At his first official briefing, government spokesman Stelios Petsas said the Mitsotakis government would not lower the tax threshold next year _ as initially agreed between Greece and its creditors. Petsas said the state would make savings worth EUR 1.5 billion with better-targeted spending controls, expanded online transactions and higher growth. Tax reductions already announced by the government at its opening debate in Parliament would be voted by August 1, he said, and debated as fast-track legislation.

# Credit standards and conditions for loans to businesses and households have broadly remained unchanged in the second quarter of 2019, according to a Bank of Greece survey _ a trend that is not expected to change in the July-September period. The survey results were announced amid expectations of a pick up in demand for household loans, both for property loans and consumer credit, while demand from businesses was set for a more modest increase. The amount of rejected loan applications was roughly unchanged on the quarter in April-June.

# Greece’s new government has agreed to set up a joint committee of experts with gold mining company Eldorado to try and revive the investment by the Canadian firm. Energy and Environment Minister Kostis Hatzidakis in Athens met with Eldorado Gold’s CEO George Burns. “The government has underlined its willingness to support the investment with the required respect for all the necessary environmental conditions,” a ministry statement said. The Vancouver-based Eldorado halted operations in late 2017, accusing the previous government of foot-dragging permit procedures.

# Piraeus Bank has published its Sustainability and Business Report for 2018, which describes the group’s main activities for the year, its corporate responsibility principles, the group’s actions, and initiatives and its future goals. “Piraeus Bank, as part of its business planning, focuses on all opportunities for recovery,” CEO Christos Megalou said. “Its main objectives for 2019 are: a) Enhancing revenue streams and operating efficiency to create sustainable profitability, b) Improving asset quality through the consistent implementation of the NPE reduction plan towards 2021 targets, c) Further strengthening capital buffers, and d) Supporting the economic development of our country.”

On our Radar: “Pure proportional election system brought 65 governments in 72 years”
A priority of the new government is to change the current pure proportional election system, voted by Syriza. Last week, in Athens, the former Italian PM Matteo Renzi, in an interview on the sidelines of the Economist Conference, expressed strong opposition to election systems that rely purely on proportional representation, using successive short-lived governments in his own country as an example. “We changed 65 governments in the last 72 years and my government was number three in terms of longevity _ unbelievable because I only served for three years … We need stability and for stability I am not sure a proportional system is the best solution.”  Renzi, who served in 2014-16, also said that he had been “very negative” towards Tsipras’ 2015 bailout referendum. But he added: “I argued against him many times, but in that period I’m sure that the decision to maintain his position at the (negotiating) table, with the support of Italy and France _ because other countries were against saved Greece.”