FinMIn Tsakalotos: The focus now on relief for middle incomes

As Greece’s economy recovers and the impact of reforms kicks in, the focus of government policy will shift toward relieving the burden on middle incomes, Greece’s Finance Minister Euclid Tsakalotos said in an interview published by “Avghi” newspaper on Sunday. He also spoke about the government’s negotiating tactics and the benefits resulting from its decision to reject the agreement offered on May 22 and push for a better deal at the next Eurogroup on June 15.

Among these benefits he listed the fact that primary surplus targets were now “locked in” at 2 pct of GDP, whereas previously they had been “at least 2 pct,” while there had also been a change to the wording concerning debt relief, with Greece’s EU partners now committed to provide debt relief “to the extent it is required” rather than “if necessary”.

Based on the new wording, Tsakalotos said, the need for debt relief measures is given and future discussion will focus on the extent of their implementation, which will depend on clear and quantified criteria. This lifted the uncertainty that accompanied the previous decisions, he added, where the implementation of debt relief retained an element of political negotiation and depended on the political will of all sides, which did not always take Greece’s interests into account.

Lastly, he said, there was greater clarity regarding the measures for growth, on which the government will now give emphasis.

On relief for middle incomes, Tsakalotos said this might take the form of lower taxes, as was already apparent in the Medium-Term Fiscal Programme voted in Parliament, or actions voted as part of the package of positive measures, which would also impact significant sections of the middle classes.

Asked about the prospects of Greece joining the European Central Bank (ECB) quantitative easing programme, Tsakalotos expressed his belief that the ECB will clear this up in the near future but declined to give a date for any test return to the markets, noting that this was a technical issue. The effort to gradually relax capital controls was constant, he added.

He confirmed that the Greek side had received “significant help” from France during the recent phase of the negotiations and also that the government hoped to bring about an alliance of the “radical Left with social democracy and the Greens” in Greece.

Regarding the economy, Tsakalotos said that the “fiscal space” that Greece had been given must now be used to “implement a new growth model, which will on the one hand correct injustices and on the other hand allow those hurt by the crisis to experience the benefits of recovery.”