BoG chief calls for a re-examination of tax exemptions

The governor of the Bank of Greece, Yannis Stournaras, called on the Finance Ministry leadership on Tuesday to re-examine all tax exemptions, stressing that “the country needs revenue.”

Stournaras noted that the shadow economy in Greece exceeds 40 billion euro and that existing tax exemptions need to be evaluated as to whether they concern the truly vulnerable.

He went on to recommend that the government continue to pursue a “prudent” fiscal policy so that the budget can double its primary surplus to 2% of gross domestic product in 2024. 

Saying that Greece “has come back from the brink and is now an international success story,” Stournaras said that the public debt is decreasing rapidly and estimated that real wages in the country will increase this year.

He said that the revenues expected to be collected by the state from the sale of the shares held by the Financial Stability Fund, though they are small compared to those allocated for their rescue, are not small taking into account the benefits it has received from the PSI as well as high dividends allocated by the Bank of Greece, which mainly come from the ELA (including the liquidity it granted to the banks).

Regarding the banks, he said they are adequately capitalized even though 50% of their capital consists of deferred tax and expressed the hope that strategic investors will express interest in National Bank and Piraeus Bank, following Unicredit’s expression of interest in acquiring 9% of Alpha Bank.

Regarding the course of interest rates, he estimated that if inflation has fallen below 3% on a permanent basis in August 2024, the European Central Bank (ECB) is likely to proceed with a small reduction in its key interest rates. [AMNA]