Greece’s Mitsotakis Says Reform Agenda Remains Despite Covid
Greece’s Mitsotakis Says Reform Agenda Remains Despite Covid
(Bloomberg) -- Greek Prime Minister Kyriakos Mitsotakis plans to continue focusing on economic reforms, even in the wake of the coronavirus outbreak.
“This government got elected a year ago on an ambitious reform program and the coronavirus has accelerated the need for the necessary reforms,” Mitsotakis said in an interview with Bloomberg TV.
“We were on a very good path and we will get derailed for 2020, but there’s no reason not to believe that the Greek recovery -- that I expect to start in 2021 -- is going to be incredibly robust,” the premier said.
Mitsotakis’s next challenge is to salvage whatever possible from the current tourism season and to weather the economic impact of the virus outbreak, he said.
Greece has one of the lowest infection rates in the world. With a population of 11 million people it had recorded 185 deaths and fewer than 3,200 cases as of Wednesday, a fraction of what other European nations such as Italy, Spain and France have reported.
The premier’s quick response to the outbreak has been credited with helping to keep the virus under control. The government moved rapidly to shutter most activity in the country and to go to full lockdown at an early stage of the crisis.
The Mitsotakis government is now trying to contain the economic effects of the outbreak. The prime minister has announced a package of support measures worth 24 billion euros ($27 billion), and his administration forecasts that Greece’s economic contraction will be around 8% this year, lower than in many other European countries.
The premier called Greece a low-risk country with a reform government that has an absolute majority in parliament and no general election scheduled for another three years. The country also “can generate nice, higher returns than in other countries, there’s a clear growth story.”
Greece opened its borders to tourists from most parts of the world on June 15 with health-based rules still in place, as it tries to lure visitors and keep alive its all-important tourism sector, which accounts for around a fifth of the economy and more than a quarter of jobs.
Tourism -- the number one job creator in the country -- is a service that can’t be outsourced and the sector will continue to create employment, Mitsotakis said.
“We have put in place a detailed protocol and specific rules related to how we plan to open up our tourism sector and we’re pretty comfortable we won’t see a second spike” in contagion, the prime minister said.
Bad Bank
One of the Greek economy’s biggest challenges, predating the coronavirus outbreak, is the huge amount of bad loans banks have on their books. The government has put in place an Italian-style asset protection plan, under which non-performing loans will be packaged into securities and sold with a partial state guarantee. The so-called Hercules project aims to cut the roughly 70 billion euros of bad loans by some 40%.
The Bank of Greece is also working on a bad bank scenario that would help eliminate the rest of the bad loans. “It’s one option, but I don’t think it is necessary now,” Mitsotakis said, characterizing it as a contingency plan that can be kept in place if something goes wrong with the initial program.
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