Office of the PM newsletter: Government efforts bolster economic resilience

The Office of the Prime Minister of the Hellenic Republic has released its fifth newsletter, this time from Davos.

Good morning from snowy Davos, where the theme of the 2020 World Economic Forum is Stakeholders for a Cohesive and Sustainable World. A fascinating session on “Striking a Green New Deal” yesterday, with Prime Minister Mitsotakis underscoring Greece’s commitment to close all lignite-producing plants by 2028 (all but one by 2023) as well as buy-in from local communities. 

1. Back home, the government’s legislative furor remains unabated, with a total of 35 bills (plus one constitutional reform) now having been voted through parliament in the seven months of this administration. No wonder economic sentiment continues to surge, reaching a 13-year high in December.

2. It used to be that potential investors would ask us whether Greece would remain resilient against the backdrop of a global economic slowdown. No longer. The most popular question we get these days is whether public opinion is behind the changes. The short answer is yes. Greece has gone through a remarkable transformation over the past decade. The most recent poster child of this shift is the implementation of the recent anti-smoking law which has proceeded without a hitch.

3. In other news, work on creating a Single Insolvency Framework is now fully underway. Committees have been formed, and a draft law is being prepared, with the unchanged objective of becoming law of the land before end-April. As discussed previously, this flagship reform will cover restructuring and bankruptcy for household and corporate debt. We aim to simplify processes radically, with the ultimate objective of shortening the periods of time required and boosting the value of the underlying collateral of NPEs. And, of course, no capitalist system is complete without an efficient mechanism to cover failure.

4. Parliament will soon debate the first installment in our pension reform. As previously advertised, we delink social security contributions for the self-employed from income, a disastrous Syriza reform that had led to a collapse in declared income. Rather, each self-employed will have the right to select the level of contributions -subject to a minimum of 220 euro a month- and receive the corresponding pension. We believe in removing constraints and allowing entrepreneurship to flourish. 

Furthermore, the bill addresses recent Supreme Court rulings by increasing the replacement rate for those working more than 30 years, thus incentivising them to stay longer in the labour force. We also reduce disincentives to employment for those receiving a pension. Last, but not least, digitisation of the pension system is moving full speed ahead, a reform that can lead to significant economies of scale as well as speed things up.

This government recognises that the burden of social security contributions for salaried employees remains sizeable for both employers and employees and is working on a plan to reduce them. 

5. In education, a fifth of university funding will now be tied to specific evaluation criteria. We also want to attract thousands of foreign students to study in Greece. This means collaborating with leading universities around the world, and developing foreign-language courses and degrees.

6. Fast-tracking of investments continues, with nine strategic investments totalling €2bn recently greenlighted. Back in Davos, the prime minister was swamped by requests to meet with leading executives of global multinational firms. 

7. Oh, the country now also has a new electoral law that restores political stability by ensuring parliamentary majority for platforms that receive a sizeable share of the electoral vote. 

What a proud day for Greece earlier this week, when parliament voted through, with an enormous majority, the PM’s nominee, Ms Ekaterini Sakellaropoulou, shattering the glass ceiling and becoming the country’s first female President. “The time has come for Greece to open up to the future,” Mr Mitsotakis said. Ms Sakellaropoulou, until recently head of the Council of State, is not affiliated with any political party.