Bruegel Institute’s chief economist: Greece’s top priority should be tax reduction

Greece’s achievement of a larger-than-expected national primary surplus, the early repayment of the IMF loan and the country’s competitive position in financial markets, was welcomed as the ‘good news’ by the Brussels-based Bruegel Institute’s chief economist, Zsolt Darvas, who spoke to Athens News Agency (ANA).

Darvas noted that economic conditions are currently quite favorable for Greece due to its debt agreements with financial institutions and will continue to be positive for some years to come, but he underlined the need to continue reforms relating to taxation and the improvement of the business environment, so that growth can stay at high levels.

What is most important, Darvas underlined, is that “in three or four years from now, more loans will begin to mature and until then we do not know whether growth will remain strong or will weaken.”

He also explained that “any deep recession is followed by some rebound, but Greece will be on the right track only if growth stays strong, with Greece completely out of the financial supervision program, standing on its own two feet.”

Darvas praised the Greek government’s decision to repay its IMF loan prematurely, which was a “very good idea because the loan has a high interest rate…more expensive than European loans,” he noted, and insisted that the reduction of taxes should be Greece’s next priority.

“Taxes are very high in Greece while the tax base is very small, people and companies continue to pay taxes, but those who pay are subject to very high rates,” Darvas said, taking the view that lowering taxes and widening the tax base is also important for improving business and attracting foreign investment.

The Greek government is trying to meet its commitments in the post-memoranda period, Darvas said, “but beyond that, it is also necessary to boost confidence in tax reforms,” he concluded.