NEWS

Greek PM sets out policies as finance minister unveils tough budget

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Prime Minister Alexis Tsipras set out his policy priorities in Parliament on Monday night just hours after Finance Minister Euclid Tsakalotos met with his eurozone peers in Luxembourg to discuss a raft of prior actions that Greek authorities must pass into law to clinch rescue funding.

Addressing the new Parliament, Tsipras said his government’s key goals were to restore economic stability, secure a return to growth, achieve debt relief and “radically reform” the public sector while cracking down on tax evasion.

“This Parliament will secure the country’s exit from the crisis within the government’s four-year term,” Tsipras said, maintaining that the debate about Grexit has stopped.

The new government has three key priorities, he said: a reduction of the debt, a recapitalization of the banks, and the creation of the necessary environment for the attraction of foreign investment. “By the end of the four-year term we will have set the foundations for a new Greece,” he declared.

A precondition for these goals to be achieved is the implementation of the bailout program, Tsipras said, stressing that it was “necessary” for the time being but that his administration would strive “to restore social justice” over its four-year term. In the meantime, Greece must press on with a series of measures, not only to secure loans but to pave the way for the launch of talks on debt relief, he said.

Tsipras said he had specific proposals for debt restructuring which Greek officials are prepared to discuss with creditors. These include the extension of loan maturities, lower
interest rates and an extended grace period for the repayment of bailout loans, he said.

The list of 49 prior actions that the government must push through Parliament includes opening up closed professions, liberalizing the energy sector, pushing forward privatizations that have been agreed with creditors and intensifying a crackdown on tax evasion. Other unpopular measures include a higher interest rate on the repayment of debts and a tax on rent payments that property owners don’t manage to collect.

Eurozone finance ministers signed off on the prior actions at a meeting in Luxembourg on Monday where Greece’s draft budget also came under scrutiny.

The blueprint, which was submitted in Parliament just before Tsipras’s speech in the House by Finance Ministry officials, foresees the economy shrinking by 1.3 percent next year, following an expected contraction of 2.3 percent this year.

It also expects Greece to achieve a primary surplus next year worth 0.5 percent of GDP and sees the central government debt peaking at 198 percent of GDP in 2016. It said authorities expect Greece to “gradually” return to the bond markets.

Tsipras, in his speech in Parliament, said he hoped Greece could tap the markets in 20 months.