·
Greece’s discussions with creditors as regards
the disbursement of 2 bios euros continue. It has been announced that today’s Euroworking
Group has been cancelled because the Greek government has ratified only 1/3 of
the 49 prerequisite measures which have agreed with creditors.
·
Greece’s banking sector index rallied by 5.5% on
Tuesday due to press linkages indicating that there has been an agreement
between government and creditors as regards the legislation related to banks' recapitalisation.
Needless to say that volume remains at extremely low levels and fluctuates
between 20-50 mios on a daily basis, due to capital controls.
·
Greece's country risk gradually improves. More specifically, 2 yr. bonds’ yield has dropped to 8.2%; it
was close to 58% on 10th July. In addition, 10 yr. bonds’ yield has dropped below 8.0%,
fluctuates at 7.8%; it was close to 20% on 10th July
·
It appears there has been a progress between
Greece and US as regards a joint venture aiming in creating an energy hub in northern
Greece. As it has been described in
previous commentaries, the project refers initially to the creation of an LNG
terminal in Alexandroupolis, which will transfer natural gas to Bulgaria and
other central European countries through IGB pipeline. The energy plan is also
included among EU priority energy-related projects.
·
The head of 'independent' secretariat of public revenues’
Savvidou defended her position publicly as regards a legal case, which is under investigation by local economic
prosecutor. She also refused to resign from her post and expressed her
intention to bring the case to justice system in order to defend her integrity.
·
There has been a significant increase of real estate purchases by non EU citizens during the last
four months. These purchases are related to the program, which awards
residence permits to non-European Union citizens who buy real estate in Greece. Although
there have been only 983 purchases of Greek property since 2013, it appears that
there has been an increase of 28.5% (on an annual basis) during the last four
months. Chinese buyers come first with 335 purchases/permits, and Russians follow with
315 permits. It seems that the interest from Middle East or Ukraine is
gradually catching up.
·
According to Greece’s Finance Ministry tax debt
increased by 1.5 bios euros in September due to inability of taxpayers to repay
their obligations. This increases the YTD budget risk to the level of 5 bios on
revenues side.
·
According to the Office of Economic and Commercial
Affairs of Romania, Greek-origin investments have reached the amount of 4 bios euros.
Greek exports to Romania increased by 17.74% during the first half of 2015,
while Greek imports from Romania increased by 4.27%.
Risk assessment. It
appears that revenues hysteresis to Greek citizens, who are not able to tax
evade has started to impact significantly state revenues. The increase of citizens’ debt by
1.5 bios in September should ring the bell to Greece’s leftist government which
favours the increase of tax revenues compared to reduction of expenses.
Tsipras needs to run fast and implement the 33 pending actions
in order to achieve not only the reimbursement of 2 bios euros but also the
recapitalisation of Greek Banks. The latter is absolutely necessary to be
completed within November in order to prevent a potential bail-in in 2016.
However, the Greek government consumes
valuable time to an endless discussion regarding ‘equivalent measures’, which will never be found.
Although it is fair to expand the existing tax base and include certain parts of economy (black economy, farmers,
islands) which traditionally don’t contribute to state revenues as part of
clientelism, the majority of Greek taxpayers (employees, pensioners, entrepreneurship
etc) need relaxation of tax burden.
As it has been stated before, the reduction
of pension system’s expenditure, in fair terms, appears as the only way to
reduce tax burden, which will also allow local economy to grow. Actually, the bottom
line of the new, additional taxation on existing pensions is translated to pensions’
cuts, anyway.
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