Regling green-lights tax cuts as long as targets are met

There will be room for changes to Greece’s fiscal policy on the condition that targets are achieved, was the message reportedly conveyed by European Stability Mechanism (ESM) Managing Director Klaus Regling to Greece’s new Finance Minister Christos Staikouras during their meeting Monday in Athens.

Regling reportedly made it clear that the government can implement the measures it deems fit, including tax cuts, but these must not come at the expense of Greece’s commitment to achieve a primary surplus of 3.5 percent of gross domestic product.

This essentially means that if revenue targets are not met and surplus targets are jeopardized, then other offsetting measures must be sought to close the gap.

The issue could not have been more timely given the state revenue results for June announced Monday, which fell below the goal set in the budget.

However, Finance Ministry sources said Monday that current estimates indicate that there will be no other fiscal gaps this year.

According to statements issued by the Finance Ministry and the ESM, the meeting between Regling and Staikouras was held in a “positive climate” and focused on the challenges and prospects of the Greek economy, the country’s commitments, as well as the new government’s priorities.

The two men also agreed to “continue their close and constructive cooperation and to intensify the effort for European integration.” 

Staikouras also met with International Monetary Fund mission chief for Greece Peter Dolman and spoke on the telephone with Eurogroup President Mario Centeno.

In a tweet Centeno said he “invited him (Staikouras) to present his policy plans in the next Eurogroup,” which will be held on September 13.

Staikouras is scheduled to meet Tuesday with the chief of the European Commission’s mission for Greece, Declan Costello.

Regling, who will take part in the Economist Conference in Athens that starts Tuesday, will also meet with Prime Minister Kyriakos Mitsotakis.

Speakers at the conference also include Staikouras, Costello, Dolman, the president of the Eurogroup working group (EWG), Hans Vijlbrief, and Nicola Giammarioli, ESM mission chief to Greece.

Meanwhile, sources said Monday that the government’s tax bill will be submitted and voted in Parliament by August 10.

The government is reportedly banking on the growth-boosting aspect of the bill. Apart from tax relief, the bill will seek to strengthen the so-called “golden visa” process and introduce changes to car leasing.