PM George Papandreou in “Foreign Policy” Magazine

Prime Minister George Papandreou in an in-depth interview in the American magazine Foreign Policy (July 19) explained the reasons behind the crisis and the measures taken by his government in order to tackle it.

He stressed that with the support of the European Union, Greece decided against defaulting, which would cause insurmountable problems especially for the banking institutions in Greece and Europe alike.

He recognized that there was a lack of transparency; there was a lot of money that was lost, wasted, through a huge bureaucracy and patronage. Nevertheless, he highlighted that “we’re committed to changing the situation.

My government, for example, has now brought in laws such as total transparency in all signatures in the public sector, putting more and more tax reform resources and contracts online.”

The premier empathised with Greeks’ sentiments of unhappiness and pain, but “the wide majority of the people realize that we needed to make changes that were long overdue in our country, such as making governance much more responsible, and running the country much more transparent.”

Finally, he debunked recent media stereotypes of Greeks being lazy and concluded saying that: “we’ve seen in this crisis is that we need more Europe, not less…[ ]

…We need to find global governance and we need to find it based on some common values on which we can agree – democratic values.”

(GREEK NEWS AGENDA)

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Stability programme on “the right track”

The team of experts from the so-called “troika” (European Commission, the International Monetary Fund and the European Central Bank), after completing their monitoring of the progress of the stability programme, said that the latter is “on track on all of the dimensions.”
 The government is ahead of the deficit reduction target set in the plan for this year and tax hikes are boosting revenues, according to the team.
The government is also making progress on more long-term economic reforms, which can help its future finances, they added.
Meanwhile, Prime Minister George Papandreou, who attended the European Union Summit in Brussels yesterday, underlined that “his government is determined to go ahead with important and difficult reforms,” in order to put the country on the right path for achieving its goals. 
(GREEK NEWS AGENDA)

PM Papandreou`s interview with Newsweek

Greece will decide whether or not to activate the EU-IMF support mechanism within the next few weeks, Prime Minister George Papandreou said in an interview with Newsweek magazine, on April16. 
Papandreou said that the aid package was not a programme for rescuing the Greek economy but would give Greece some “breathing space” in which to carry out necessary reforms, giving the government room to manoeuvre as it embarks on changes that would make the economy sustainable:
“We’re not looking for scapegoats. These are problems of our own making. Markets, however, take a snapshot of the day, projecting it onto the future. It’s difficult for them to evaluate the changes we are making: changes in mentality, changes in our political culture. That may take some time for the markets to realize. But we need a period of calm to make these changes happen. We just passed a new tax law, for example, that is a major revolution in our country. It’s more just and transparent, and it will target tax evaders. This will help slash our deficit. Those numbers are bound to come down”.

Government announced austerity plan

PM: “Sacrifices will Bear Fruits”

The government announced yesterday an additional set of measures bound to slash the double-digit public deficit.
Speaking yesterday at a Cabinet meeting, Prime Minister Papandreou said that the emphasis is now shifting to what the European Union will do. 
The new measures aim at bringing into public coffers some €4.8 billion, amount which corresponds to 2% of the country’s GDP.  

Pay Cuts

In particular, the new measures include a 30% pay cut of public sector’s supplements allocated annually, and a 12% across the board cut of public servants’ benefits. Moreover, subsidies to public entities and their social security funds will be reduced by 10%.
Any additional remuneration in the public sector will be trimmed by 50%, and compensation for overtime work will shrink by 30%.

Executive bonuses in the public sector will be abolished and the Public Investment Budget will be curtailed by 5% (€500 million). As of 2011, the ratio for public sector hirings will be one for every five retirees.

Taxation

VAT is expected to rise at all cases by an average 1% to 2% and an extra levy on fuel, cigarettes, liqueur and luxury products will be imposed.
A one-off tax of 1% on personal incomes above €100.000 will also be introduced, together with a 15% rise in taxation of offshore companies’ real estate property.
Kathimerini daily: Further Cuts and Tax Hikes Announced
(GREEK NEWS AGENDA)

Tax and spending policy

PM: Tackling Economic Woes

(GREEK NEWS AGENDA) Prime Minister George Papandreou chaired a Cabinet meeting that discussed the draft tax bill and public-sector incomes policy.
He said that the government’s efforts to tackle the country’s economic problems will focus on three axes: reducing public debt, promoting growth, and accelerating legislative and institutional measures.
Papandreou stressed that the government’s primary duty was to save the economy, striving for fair solutions that would protect the lower and middle classes as much as possible.

FinMin: New Tax Rates

A range of public spending cuts and tax adjustments were presented by the government yesterday, following an announcement last week by the premier that drastic measures would be taken to prevent Greece from defaulting.
Finance Minister George Papaconstantinou unveiled more specific policies, which included plans to cut the salaries of the premier and his ministers, a moratorium on hiring in the public sector this year – excluding however health services –  as well as changes to the tax system, which will now contain more tax brackets and will lead to higher earners paying more.

Greece: New Tax Measures

(GREEK NEWS AGENDA)  Economy and Finance Minister Yiannis Papathanassiou unveiled changes in the tax policy yesterday aimed at tackling the international crisis, by increasing budget revenues and providing relief to small businesses, along with initiatives to clean up government finances. The minister said he would reinstate a €10,500 tax-free threshold for the self-employed that had been dropped by his predecessor in August 2008. Taxes on tobacco and alcohol – except wine – will be increased, providing government coffers with an additional €350 million. Other fiscal measures announced include changes to the property tax (ETAK). On the expenditure side, the ministry plans to save about €500 million by diminishing hiring, overtime, and travel expenses. The ministry expects economic growth to slow to an annual pace of 1.2% in 2009, from approximately 3% last year. The European Commission believes Greece’s economy will expand at a rate of just 0.2% this year. Kathimerini daily: Crisis prompts new tax measures Ministry of Economy and Finance: Update of the Hellenic Stability & Growth Programme 2008-2011  (January 2009)

Doing Business in Greece

(GREEK NEWS AGENDA)   According to the Doing Business 2009 Report, Greece has improved its overall Ease of Business index, moving up to rank 96 (from 106 in 2008). Greece cut the minimum capital requirement to start a business by 80%, reduced capital tax and made publication of company statutes quicker. It also introduced electronic payment of social security tax, and passed a new bankruptcy law that is expected to allow more companies in distress to emerge as going concerns. Finally, Greece strengthened director accountability by making it easier for shareholders to sue directors for damages caused by related-party transactions.  The Doing Business Report, published by the World Bank Group, is tracking reforms in 181 economies. Greece’s areas of reform were: Starting a Business, Protecting Investors, Paying Taxes, Closing a Business  InvestInGreece Agency: www.investingreece.gov.gr; Competitive Greece: Surveys on Competitiveness;  Ministry of Economy &  Finance: Tax Reform & Investment Incentives Law  Greek News Agenda: The Greek Economy-Pointers; Secretariat General of Information: About Brand Greece- A New Economic Policy: creating a favorable environment for investment  Secretariat General of Information: World Media on Greece – Special Reports