Greece’s new Prime Minister Kyriakos Mitsotakis vows growthhttps://indianexpress.com/article/world/greeces-new-prime-minister-kyriakos-mitsotakis-vows-growth-5841519/

Greece’s new Prime Minister Kyriakos Mitsotakis vows growth

Prime Minister Kyriakos Mitsotakis has said Greece will ease taxes on its citizens while upholding austerity targets set by foreign lenders. The new premier vowed growth plans would be a "pleasant surprise for Europe."

New Democracy conservative party leader Kyriakos Mitsotakis speaks outside party’s headquarters, after the general election in Athens, Greece, July 7, 2019. (REUTERS)

Reiterating his election pledge for a “rebirth of the middle class,” newly elected Prime Minister Kyriakos Mitsotakis told parliament Saturday he would immediately implement a reduction of a highly unpopular property tax, while pledging to fully respect the fiscal targets Athens has agreed with its international lenders.

Mitsotakis said the property tax, introduced at the height of the euro crisis in 2012, would be cut by an average 22% this year. He has also offered to reduce income tax thresholds and to gradually cut tax on business profits, measures his supporters — squeezed by tax increases — have welcomed.

With savings and growth initiatives, he added, “we will make Greece a pleasant surprise for Europe.”

Mitsotakis, whose New Democracy party beat leftist former premier Alexis Tsipras in Greece’s July 7 election, said bold economic and public administration reforms should lead to higher growth after 2020.

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Until then, he told parliament, fiscal targets agreed by Tsipras with lenders would not be disrupted, adding that a required primary budget surplus of 3.5% in 2019 and 2020 would not be affected by his conservative government. After 2020, he said he hoped lenders would be persuaded to accept a surplus lowered to “more realistic levels.”

Eurozone remains cautious

The current deal with creditors, including the International Monetary Fund, sees no relaxation before 2022.

Visiting Athens last Thursday, the eurozone’s rescue fund head, Klaus Regling, said Mitsotakis’ growth-friendly policy was “positive” but the question remained as to how Athens would cope with “less revenue.”

Greece emerged from lender-overseen economic adjustment programs last August, but with its economic output eroded by 25% since the Greek debt crisis began in 2008. Its public debt of 180% of GDP is the highest in the EU.

Avoid privatization, urges Tsipras

Tsipras, whose left-wing Syriza party garnered 31.5% of the vote compared to New Democracy’s 39.8%, defended his record on Saturday, saying Mitsotakis could afford to cut taxes thanks to the previous government’s economic restraint to fulfill bailout terms.

Tsipras urged the new Cabinet not to privatize Greece’s key state-controlled Public Power Corp., which has arrears of €2.4 billion ($2.7 billion) from consumer bills left unpaid.

Mitsotakis has spoken of privatization of the utility’s power networks and the search for a strategic investor.

Mitsotakis also plans to relaunch the sale of Hellenic Petroleum, the country’s biggest oil refiner, and has vowed to press ahead with an €8-billion investment plan for Athens’ disused Hellenikon airport.

“Hellenikon will soon become the symbol of a new Greece of … extroversion and innovation,” he said.