BoG governor calls for re-examination of tax exemptions

Bank of Greece (BoG) governor, Yannis Stournaras, on Tuesday requested a review of all tax exemptions by the political leadership of the finance ministry, adding that “the country needs revenue.”

Stournaras was speaking at a conference organised by ‘Kyklos Ideon’ think tank.

He also argued that the revenues expected to be collected by the State from the sale of the shares held by the Financial Stability Fund, even though they are small compared to those allocated for their rescue, are not small taking into account the benefits it has received from the PSI as well as high dividends allocated by the Bank of Greece, which mainly come from the ELA (including the liquidity it granted to the banks).

He reiterated that the black economy in Greece exceeds 40 billion euros, stressing the need to re-examine the social usefulness of existing tax exemptions and whether they concern the truly vulnerable.

The chief of the central bank said that Greece “has come back from the brink and is now an international success story.”

He also recommended the continuation of a “prudent fiscal policy” in order for the budget to double its primary surplus to 2% of GDP in 2024. He added that the public debt is decreasing rapidly, estimating that real wages in the country will increase this year.

Regarding the banks, he said they are adequately capitalised even though 50% of their capital consists of deferred tax and expressed the hope that strategic investors will express interest in National Bank and Piraeus Bank, following Unicredit’s expression of interest in acquiring 9% of Alpha Bank.

Regarding the course of interest rates, he estimated that if inflation has fallen below 3% on a permanent basis in August 2024, the European Central Bank (ECB) is likely to proceed with a small reduction in its key interest rates.