Athens Digest 26.09.2019

• Greece, creditors set benchmarks for 2020

Mitsotakis meets Erdogan, says Turkey can do more to stop migrants

Jan-August budget figures beat targets

EUR 17.4 billion in soured loans serviced by CSFs in 2nd quarter

Tourism industry seeking reassurance after Thomas Cook collapse

Draghi due in Athens

# Discussions with creditor institutions were concluded in Athens with agreement that there is no concern over a potential fiscal gap in 2019, according to a Greek official familiar with the talks. Regarding 2020, the official said, “you can never say in September what the gap the following year might be,” speaking also in response to a local report that creditors were anticipating a 2020 gap worth 1 percent of GDP. He said that Greece and the mission heads did make progress on privatisation plans, while discussions on the upcoming fiscal year were centred around tax collection, the impact on the economy of concessions worth EUR 1.2 billion, and measures required to boost revenue collection, adding the officials at today’s Euroworking Group meeting were expected to consider Greece’s request for the early repayment of IMF loans.

# Prime Minister Kyriakos Mitsotakis and Turkish President Recep Tayyip Erdogan have reportedly agreed to reactivate a bilateral cabinet body known as the Supreme Cooperation Council in an effort to ease tension between the two NATO allies. The meeting _ the first with the Turkish leader since Mitsotakis took office _ was held on the sidelines of the UN General Assembly in New York and follows a spike in arrivals of refugees and migrants at Greek islands. The prime minister later told Bloomberg: “I raised the issue of migrants coming across the Aegean. We’ve seen increased numbers of migrants and I’m sure that Turkey can do more to implement the EU-Turkey agreement … the EU- Turkey agreement is a win-win agreement provided it is implemented on all sides. And of course, it is sensible to make sure that the EU supports Turkey with funds as Turkey is managing a complicated situation on its own territory.”

# Finance Ministry figures for the state budget’s primary balance showed a surplus of EUR 2.906 billion for the first eight months of the year, against the target of EUR 272 million in deficit. The January-August primary surplus last year was EUR 1.124 billion. The actual balance for the eight months was a deficit of EUR 1.588 billion.

# The Bank of Greece says the total amount of loans serviced by Credit Servicing Firms in the second quarter was EUR 17.448 billion, compared with EUR 17.570 billion in the previous quarter of 2019. “It should be noted that the amount of loans serviced includes loans of an initial value of EUR 9.380 billion, which had been written-off by credit institutions and were not reported on their balance sheet,” the bank said.

# Greek tourism industry leaders are continuing talks with the government to try and reach an agreement on how to support local businesses affected by the collapse of Thomas Cook. The two sides are reportedly discussing proposals that would not burden taxpayers but would send a signal of support to the tourism industry. One of those proposals includes a VAT waiver for affected businesses which have paid VAT on income they have never been paid, a move designed to boost liquidity in the hotel sector. Adding to the urgency of the talks in Athens was the news that Thomas Cook’s German subsidiary was also filing for bankruptcy.

On our Radar: Draghi to meet PM
European Central Bank President Mario Draghi is due to visit Athens on October 1 to attend an event at the Athens Academy. He is expected to meet with Prime Minister Mitsotakis and Finance Minister Christos Staikouras. Former IMF managing director Christine Lagarde will take over from Draghi on November 1.