ATHENS – The government will announce targetted sectoral tax interventions, taking into account not only their impact on the 2020 fiscal data but also their impact on the 2021 fiscal result, the finance ministry's Secretary General of Economic Policy Christos Triantopoulos said in an interview with the Athens-Macedonian News Agency (ANA) on Tuesday.
He pointed out that the new status quo with respect to economic globalisation and related developments will create opportunities for competitive Greek companies in the primary sector, manufacturing, new technologies and various dynamic sectors of the Greek economy to claim a new and larger share of international production distribution. In this direction, the support of the state is a given, he added.
Q: In the unfavourable scenario of the Stability Programme sent to the European Commission, a recession of 7.9 pct is forecast for this year, while the Commission sees a 9.7 pct recession. How likely is this scenario given that the European Union is delaying the disbursement of much-needed funds (eg the SURE programme)?
A: The coronavirus pandemic is testing the resilience of societies and economies all over the world, as well as in our country, causing great uncertainty worldwide. Because of this uncertainty, the government included two scenarios in the EU's Stability Programme: the basic scenario, according to which the recession in 2020 is estimated at 4.7 pct, after the impact of the government's measures to deal with the consequences of the pandemic, and an unfavourable one, according to which the recession is projected at 7.9 pct, again taking into account the impact of the measures. Without the support measures that have been taken or will be taken by the government, the recession is estimated to range between 10 pct and 13.2 pct, respectively.
The goal, however, is not to confirm any adverse scenarios but to mitigate, as much as possible, the recessionary effects and losses of the Greek economy.
In this direction, the implementation of the plan to deal with the coronavirus crisis is progressing, both through horizontal policies to support income and increase liquidity for businesses, and through sectoral interventions in the immediate future. A plan that fully utilises both community resources and programmes.
In this context, after the recent decisions of the Eurogroup, still pending – and this is a government priority – is the immediate completion and implementation of recent European decisions for supporting workers and businesses, through the SURE programme and the creation of a European-wide guarantee fund by the European Investment Bank. Decisions that should be implemented immediately, from June 1, without the moment of the disbursement of EU funds by the SURE programme affecting the annual impact of the measure on the economy.
And, of course, the creation of a Recovery Fund is pending in order to meet the challenges that all European economies face.
I believe that by working methodically, effectively and with a sense of justice, we will be able to mitigate the impact of the crisis on the economy, by laying the groundwork for a dynamic recovery in 2021, as the European Commission recognises in its spring forecasts.
Q: GDP in Greece is largely based on tourism and consumption. Can the crisis be an opportunity to strengthen other areas, such as the primary sector, manufacturing or new technologies?
A: The crisis of the coronavirus pandemic is not like the previous ones. It has no intrinsic characteristics, meaning that it is not due to the internal weaknesses of economies or inherent delays in a market. It is exogenous and universal, making it a catalyst for rethinking the game of economic globalisation, as we knew it before the pandemic.
Thus, production and value chains, as well as trade and economic flows, may be re-evaluated and altered. An imminent review of the game of economic globalisation and the related reshuffles that will occur, will be the opportunity for competitive Greek companies in the primary sector, in processing, in new technologies and in various dynamic sectors of our economy to claim a new and bigger share in international production distribution.
These are companies that have managed, through their competitiveness, their adaptability to developments and their penetration in new markets, to withstand and move forward during the previous difficult decade, and fulfill the requirements to be among the "winners" of redistribution. And in this direction, the support of the state is a given, providing tools and programmes to strengthen liquidity and support employment.
The contribution of the programmes and tools – horizontal or sectoral – of a "brave" and ambitious European Recovery Fund, linked to the new multi-year fiscal framework, will also be important for the support of companies.
Q: Given that there are no budget constraints, can there be tax cuts in the second half of this year – even extraordinary ones – for a positive shock in the economy? At a sectoral or horizontal level?
A: From the first moment of the crisis, the government is developing and implementing a plan to support the Greek economy, in order to address the effects of the crisis, but also to gradually shape the conditions for restarting for the next day. A plan that includes measures and policies with a total value of more than 24 billion euros.
The measures, which are being implemented and promoted, lead to a clear reduction in public revenue and an increase in public spending and, combined with the effects on public finances from the recession due to the pandemic, have created a new state of affairs for 2020. It is, of course, very positive and encouraging that, in the midst of such a difficult situation, the lag in public revenue is less than initially estimated, proving that citizens have been conscientious in meeting their obligations.
Based on these new facts, therefore, it is particularly important for our country that it has been included and is able to utilize, capitalising on the performance and reliability of recent months, the relatively "loose" fiscal environment of the European Union for 2020. In this context, the government continues to process and review additional and alternative scenarios, either horizontally or sectorally.
These scenarios include targetted sectoral tax interventions, while always taking into account not only their impact on the fiscal data of 2020 but also their impact on the fiscal result of 2021. The government's decisions will be announced in due course, he said.