Notis Mitarachi, the Greek Under-secretary for Development and Competitiveness
During his two day visit in London and his participation as a keynote speaker on the first day of Athens Exchanges’ 9th Greek Road Show in London, Notis Mitarachi, the Greek Under-secretary for Development and Competitiveness, gave an interview during CNBC’s “Squawk Box” broadcasting.
Here follows the interview exchanges:
CNBC: 29% unemployment, let me add 175% debt to GDP, you’ve lost a quarter of your economy he disputes the fact that Greece is back on track.
Minister: He said recently and he is right that the government is trying to do the impossible, is trying to return the economy back to growth in an environment of fiscal contraction and that’s really a hard task to achieve, but 2014 we are back in (..) of territory of GDP growth; the debt to GDP has increased because of the contraction of the GDP but the interest expense as representative GDP has declined 50% from the beginning of the crisis. Unemployment is now back at 26% latest official data, we’re seeing foreign direct investment in 2013 returning at the trend we had before the crisis and actually multiplied by three times in the first six months of 2014. So it is tough, the social cost of this adjustment is very high greek government recognizes that however we have to operate within specific constraints. It will be wonderful if we have doubled the funds that we have to spend.
CNBC: Of course, but there is a question of whether the government given all you just said has the appetite to carry on with what many saying “draconian” taxes the government has already said is going to cut some very unpopular taxes created at the height of the crisis saying after years austerity we may be as in less in the need for austerity but given those dynamics and debt you still need the austerity don’t you?
Minister: No because we are now on a fiscal surplus. Greece according to European commission has the highest structural surplus among all Euro-zone countries if we remove the recession impact. With the recession impact we are still on positive fiscal territory, both into 2013 we overshoot our target, we have achieved a primary surplus which the program did not expect we will continue having that into 2014, so clearly the direction of the country would be to reduce taxes in the years going forward for example the Prime Minister said corporate taxes should go to 15% from current 26%. Already in 2013 we started reducing taxes starting from VAT.
CNBC: That is the overnight news has been disappointing for those who were hoping that the TLTRO (Targeted long-term refinancing operations) program would encourage European banks to make more money available, easy rates into the real economy. The take up on TLTRO was way bellow the expectation. Is that disappointing news to you, does it indicate that actually we are still a long the way away from European economies in the south coming back to anything like previous trend growth rates.
Minister: Clearly, we are concerned with regard to liquidity. The Greek banking system is reducing credit expansion, because they do not have the sufficient liquidity needed, we are seeing deposits coming back since 2012 and that is a positive trend that is helping organically the banks to recover part of the lending. We’re working with sovereign institutions like KFW, the European Investment Bank and other banks in Europe, to create additional financing mechanism in the Greek economy to inject liquidity. We do recognize though however we’re still in a constraint environment and that is a problem for the south economies.
