Reforms to bolster economy
There are certain areas where structural changes need to be prioritized by the new government, starting with the sluggish justice system, the red tape putting off potential investors, the overdue cadaster and Greece’s aging infrastructure.
Participation in the labor market by women and young people is also below par and, in combination with the demographic crisis, stands in the way of growth, as businesses are already struggling to find staff – another obstacle to investments.
Tax evasion is another chronic problem that Kyriakos Mitsotakis has vowed to address in order to bolster public finances and move ahead with the tax reductions he has indicated.
In any case, the government will have to secure primary surpluses of at least 2% of gross domestic product starting next year and be prepared to submit to the scrutiny of lenders under a new Stability and Growth Pact that will have to be negotiated with the European Union. Those in the know say that the new agreement is likely to be stricter than hoped for, particularly if Germany has its way.
Greece is, after all, obligated to achieve a primary surplus and reduce its debt over the next nine years through 2032, when the grace period comes to an end and interest kicks in.
