Fokion Karavias: The ‘opportunity of the pandemic’ and how to make the most of it
EUROBANK
The coronavirus crisis found Greece in a crucial phase, just as it was about to increase its pace of growth. Today, however, things are very different to the decade of the recession. Greece has drawn international attention again, though in a positive manner which no one had expected.
The state played a central role in this great and sudden test to evolve into a point of reference and opportunity. Success on the health side was the beginning. At the same time the prime minister utilized it in communication terms, improving Greece’s global image significantly. The benefits of this for the country are great and can be capitalized on. For instance, the impact this year on the tourism sector will be serious, but out of those who do decide to travel many will choose Greece, thanks to its reputation as a safe destination.
The positive impact will not be restricted to tourism. The country’s performance contributed substantially toward Eurobank completing a major agreement for the streamlining of its financial balance, relieved of the burden of its stock of nonperforming loans. The agreement with Italy’s doValue was the first major private investment in Greece after the pandemic crisis.
Simultaneously there are some particularly positive developments on a European Union level. For the first time Greece is participating in the European Central Bank’s quantitative easing program, maintaining a low cost of borrowing through state bonds. Nevertheless, what is most important of all is the share in the Next Generation EU initiative, with cash amounts that justify the estimate that Greece is the biggest winner from what is a historic step for Europe.
Therefore the next challenge is not so much the depth of the 2020 recession, but rather under what conditions we will cover the lost ground in 2021. On a health level, the state correctly recognized the emergency conditions, the “state of war” and took the necessary measures. Likewise conditions are warlike for the economy too, not just today as a result of the coronavirus, but as they have been for the last decade. Unfortunately we were late in accepting that; and the strongest weapon to help us win that war is investments.
We immediately need to start implementing a rich program of public and private investments and accelerating privatizations. The public and private sectors need to cooperate in drafting a list of grand projects that will be mainly – though not exclusively – infrastructure works, that can start right away, within the next six months. As licensing times are crucial, I propose a special licensing framework for investments of high significance and immediate realization that will sidestep problems and procedures and based on the standard used for the realization of projects connected to the Athens Olympics ahead of 2004 Games. What are the problems that are keeping investments at anaemic levels? It’s not financing; with considerable European resources and sufficient liquidity in the credit system and the markets, the financing is secured. Emphasis must be placed on tackling historic weaknesses, such as the major issue of licensing and zoning, as well as the speed of justice. By tackling these the country will multiply the efficiency of tax moves that could have a substantial contribution, such as the overdepreciations as an investment incentive and the reduction of social security contributions and the labor taxation rate.
In spite of the economic contraction and the other problems Covid has brought this year, the pandemic has already turned into an opportunity. It showed that another Greece is possible. A different expectation has been created, as well as the real groundwork for that to happen.
THE COMPANY AT A GLANCE
The Eurobank Group is a dynamic financial corporation with a presence in six countries and a sum of assets worth 65.8 billion euros. With a total network of 651 points of customer service in Greece and abroad, it offers an integrated range of financial products and services to individuals and enterprises, leading in recent years to the development of the domestic banking environment.
