Brussels Think Tank: No Real Greek Recovery Without Strong Growth

FILE - People sit and walk on the steps of central Syntagma Square in front of the Greek Parliament, in Athens, on Monday, Jan. 28, 2019. (AP Photo/Petros Giannakouris)

Undercutting Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ claim he’s bringing recovery from a nine-year economic crisis, that won’t happen without a big boost in growth that’s being held by big tax hikes scaring off foreign investors.

That was the assessment of Brussels-based Bruegel Institute senior economist Zsolt Darvas who told the Athens News Agency that taxes must be cut – which major opposition leader Kyriakos Mitsotakis pledged to do if he wins elections this year.

Breaking campaign vows in 2015, Tsipras didn’t halt austerity measures and imposed more as conditions for a third bailout that year, for 86 billion euros ($96.42 billion) from the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM.)

That was part of three rescue packages of 326 billion euros ($365.51 billion) that included participation from the Washington, D.C.-based International Monetary Fund for the first two before it was replaced by the ESM in the third.

The bailouts ended on Aug. 20, 2018 and a 10-year bond was sold earlier this year at interest rates more than three times higher, preventing a full return to the markets with investors also said wary over political instability and the tax hikes that drove the corporate rate to 29 percent, along with SYRIZA resistance to foreign companies.

Darvas noted the larger than expected primary surplus of 4.4 percent of Gross Domestic  Product (GDP) that critics said was built to give handouts and boost SYRIZA’s re-election chances and doesn’t include interest on the debt, the cost of running cities and towns and state enterprises, social security, some military expenditures and holding back payments to people and companies owed money by the state for years.