Greece: Business group leader: Greek economy still vulnerable to internal, external risks in post-memorandum period
- Category: Economy
- Published on Monday, 20 August 2018 09:50
Τhe president of Greece's Hellenic Confederation of Commerce and Entrepreneurship (ESEE), Vassilis Korkidis, this week detailed his assessments of the country's post-memorandum prospects and challenges, in separate interviews with Japan's NHK group and China state television (CCTV).
The third - and last - successive bailout extended by institutional creditors officially ends this month (Aug. 20, 2018), with the Greek state obliged to borrow from the markets to service its future debt needs, although a current "cash cushion" of upwards of 20 billion euros is expected to "soften" any post-bailout tribulations.
In a press release issued by the ESEE, Korkidis was quoted as saying:
"...Next week our country formally leaves a long eight-years memorandum period, leaving behind 924,000 unemployed, 250,000 SMEs out of business and most of the Greek people with arrears to tax authorities, insurance funds and banks, of 227 billion euros.
"During the memorandums, Greek governments attempted to impose a so-called tax levy to achieve much-needed fiscal consolidation and the surpluses required. However, the dramatic reduction in incomes has led to a contraction in consumption, with direct and indirect taxes on state funds being lower than in the pre-crisis period. It is characteristic that in 2017 the direct income tax amounted to 20 billion euros and in 2018 to 21 billion euros, when in 2010 the state funds were almost 18.7 billion euros. In doing so, one should take seriously into account of the extensive tax evasion that affects both real economy and State revenues.
"Tax arrears in the first half of 2018 have already exceeded 5.1 billion euros, and therefore the remaining questions are on one hand, whether households have the money to pay the taxes, and on the other hand if businesses have collected what they are due to pay for "memorandum taxes" of 4.3 billion euro on time. For the real economy, the final exit from the memorandums should normally signal the increase in turnover and profitability of the Greek enterprises, the return of liquidity from banks to the market, the lift of capital controls and the end of the over-taxation on natural and legal entities. I think it is very premature for those involved in SMEs to be reluctant and it would be a tragic mistake to conclude that we have get through all our difficulties. Certainly, the macroeconomic figures have shown signs of improvement in some sectors, but the positive economic data has not yet passed to the Greek society.
"The Greek economy is still vulnerable to internal and external risks. In the post-memorandum period there will not be an 'all good' in Greece, but we are well prepared to overcome obstacles in the next four year period. The 21st of August 2018 is a date of consideration and not celebration..."