Private Sector and Reforms: Cornerstones of Greece 2.0

Alex Patelis, Chief Economic Adviser to Prime Minister Kyriakos Mitsotakis, is optimistic about a strong post-pandemic economic rebound, while emphasising the weight of structural reforms and global capital in creating a new investment landscape.

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GIG: Greece has had a difficult decade, with the financial crisis followed by the pandemic – but the Pissarides report also pointed to long-term structural weaknesses in the Greek economy. Where would the government like to see Greece in the next 10 years?

Patelis: Greece has turned the corner from a decade of crisis and looks ahead to its future with pride and optimism. This year we are celebrating 200 years since the war of independence in 1821. We are building a confident, strong Greece. Reforms are the cornerstone of our plan, aimed at accelerating productivity and attracting global capital.

GIG: What are the biggest challenges that Greece currently faces in getting on the path to growth?

Patelis: From the beginning we have identified three key priorities. First, to lower taxation while keeping fiscal discipline. We are well on track. For example, we have significantly slashed social security taxes. Second, to reform the economy.

Structural reforms are the backbone of government policy. Parliament has already passed a record nearly 180 bills.

Third, to strengthen the banking system. Hercules I is slashing NPEs in half, and Hercules II is already in the cards.

GIG: What are the priorities for the government in kicking off Greece’s post-pandemic recovery? Which do you consider to be the most important first steps?

Patelis: We are optimistic of a very strong post-pandemic recovery. In 2020 the Greek economy was vulnerable to the collapse in the global travel industry. Nevertheless, the country did better than expected. In 2021 and 2022 we expect a tourism surge to take the lead in the recovery. Bank deposits have surged, and government support has protected employment and businesses. Interest rates and borrowing costs have plunged. Meanwhile the banking system has been strengthened.

Importantly, the image of the country overseas has turned the corner. We expect very strong capital inflows together with a surge in consumption to turbo charge our recovery.

GIG: Greece is in line to receive close to €72 billion in EU funding over the next six years to help its recovery. Where does private sector investment fit in this picture?

Patelis: The private sector is a cornerstone of the so-called Recovery and Resilience Plan for Greece. The plan, called Greece 2.0 was formally unveiled in April, and has received great accolades. It is an ambitious, coherent programme of many, many reforms and investments that will change the investment landscape of the country, improve productivity, and lead us to the future. There are four main pillars: green; digital; employment and social cohesion; and private investment and institutional transformation.

GIG: What are the reform priorities that would make Greece a more attractive investment destination?

Patelis: We are slashing bureaucracy and red tape and simplifying procedures. There is a new insolvency mechanism that oversees the restructuring and bankruptcy process. We are digitising the Greek state to make everything easier and more efficient. The education system, particularly vocational education, is being upgraded.

There is significant judicial reform in the cards. Licensing rules have been eased. Strategic investments receive top priority.

Investment in real estate is being strengthened. Taxation of both capital and labour has been significantly lowered, with incentive schemes for overseas capital and labour. The banking system is stronger. And we look forward to a greener, more digital future!

GIG: Which sectors do you think would benefit from more investment? We know that the green economy and the digital sector are the pan-European priorities, but are there more areas of economic activity with untapped potential for growth?

Patelis: It is not the job of a government to identify sectors for private investment. As you rightly point out green and digital are a priority of Europe, and also of Greece. We still see enormous opportunities in a variety of sectors, whether logistics, or tourism, or real estate, or infrastructure or services or others. Greece has a huge pool of labour talent to offer combined with its unique geographical position, strong institutional and political stability, as well as being blessed with beautiful nature. We call on investors to come to see what we have on offer.

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