Athens Digest 03.20.2019

• Talks with lenders focused on 2020 budget fiscal gap, Moscovici due in Athens

Government briefs Draghi on reform agenda

Commission hearings continue with Schinas at European Parliament

Greece’s lags in international tax survey

# Greece and European institutions are continuing talks on the 2020 draft budget, aimed at covering a fiscal gap of app. 0.5 percent of the GDP, ahead of the October 15 submission deadline. Greek sources with knowledge of the negotiations said they are hopeful that outstanding issues may be resolved by the end of the week while sticking to the central target of a primary surplus of 3.5 percent of GDP. Pierre Moscovici, the outgoing EU financial affairs commissioner, is due in Athens tomorrow. He met in New York last week with Prime Minister Mitsotakis on the sidelines of the United Nations General Assembly.

# Mario Draghi has received a briefing from Greece’s new government on how it intends to attract foreign investment and reduce the level of non-performing and distressed loans. The outgoing European Central Bank president met in Athens with Prime Minister Mitsotakis. Also reportedly present at the meeting were Finance Minister Christos Staikouras, his deputy Giorgos Zavos, and senior aides to the prime minister Dimitris Mitropoulos and Alexis Patelis. In Greece to receive an award from the Academy of Athens, Draghi also met Yannis Stournaras, the Bank of Greece governor.

# Confirmation hearings for members of the incoming European Commission continue at the European Parliament today with Greece’s Margaritis Schinas, the nominee for vice president for Protecting our European Way of Life. That position includes oversight of immigration and security, as well as employment and education. Today’s session will open with Paolo Gentiloni of Italy for the economic affairs portfolio and will also include Estonia’s Kadri Simson for energy. The hearings end on October 8 before Commission President Ursula von der Leyen assumes office on November 1. The Hearings can be watched live here.

On our Radar: Tax Troubles
Despite years of reforms, Greece still has a poorly structured tax system that is among the least efficient in developed nations, according to a survey. The US-based Tax Foundation ranked Greece in 30th place out of 36 OECD member states in its annual International Tax Competitiveness Index _ one place better than in 2018. “Greece has an above-average corporate tax rate of 28 percent (OECD average is 23.6 percent),” the report said. “Companies are severely limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income. At 24 percent, Greece has one of the highest VAT rates in the OECD on one of the narrowest bases.”