Athens Digest 03.09.2019

• PM visits the Hague while discussions with lenders are heating up

• Citi sees path for budget-target relief in the future

• Property tax bill trimmed for most owners

• House prices up 11 percent in Athens

• Migrants shipped to mainland from overcrowded camp

# PM Mitsotakis travels to the Hague to meet Dutch Prime Minister Mark Rutte today, completing a tour series of European visits. Meanwhile, Greece and its creditors are discussing a proposal to change how returned central bank profits on Greek bonds would be counted in the country’s public investment programme. A change in procedures would effectively help Greece meet its primary budget target. Athens is seeking the change without any additional conditions but the move is expected to be linked to specific investment projects.

# Greece’s 5-year bond yield, astonishingly, is now below 1 percent, while the 10-year rate is just 1.6 percent _ a trend that Citibank says could spell a brighter post-bailout outlook for the country. In a note to investors, the bank said the tumbling rates could have an impact on future Debt Sustainability Analyses. An improved picture, it argued, could boost Greek hopes of lowering primary surplus targets in the future and create additional fiscal space to pursue more ambitious growth policies. A more positive Greek DSA could also have implications regarding the European Central Bank’s upcoming decision on whether to include Greek securities in the QE program, a move that would significantly boost liquidity in the country’s economy.

# This year’s property tax bill will be EUR 575.2 million lower nationwide, according to figures announced by the Independent Revenue Authority. The total sum sought for 2019 will be EUR 2.539 billion compared to last year’s bill of EUR 3,093 billion. Most owners saw a reduction in the 20 or 30 percent bracket depending on the tax-listed value of their property. More generous reductions were granted to the lowest income categories. While the bailout-era property tax remains hugely unpopular, the changes are line with reductions promised and recently legislated by the new conservative government.

# Property prices in Greece have continued to rise, according to central bank data, up 11.1 percent in greater Athens on the year in the second quarter and 7.7 percent nationwide. The Bank of Greece figures reflected growing demand fuelled by the recovery and popularity of short-term rental services for holidaymakers. The increases in other parts of Greece were more modest: at 7 percent in Thessaloniki, 4.1 percent in other cities and 4.9 percent in other parts of Greece.

# More than 1,500 asylum-seekers are being shipped from an overcrowded camp on Lesvos to the Greek mainland as the government struggles to cope with rising arrival numbers from Turkey. The migrants and refugees will be moved to camps in northern Greece. In Brussels, EU Commission spokeswoman Natasha Bertaud said the EU remained committed to the 2016 EU-Turkey  agreement, adding: “We trust that we can continue this work in good faith.” The Commission, she said, was willing to provide support for emergency measures announced in Greece at the weekend to boost Aegean Sea patrols.

On our Radar: New top economic adviser to PM
Alex Patelis, a former head of international economics at Merrill Lynch who founded his own macroeconomic research firm, has been tapped to become the chief economic policy advisor to PM Mitsotakis.