Kyriakos Pierrakakis, Minister of National Economy and Finance , spoke about the differing perceptions of Greece at home and abroad, as well as issues such as private debt , during KPMG’s 24th CFO Forum in Greece, titled “Economic Policy in an Environment of Geopolitical and Political Turmoil.” The central message of the conference was “The CFO Shift: Tech. Talent. Transformation.”
During the discussion, the economic duality characterizing the country was analyzed in depth, as Greece’s impressive macroeconomic progress abroad often contrasts with the daily pressure households face due to rising costs.
The minister highlighted the resilience of the Greek economy in the face of international energy crises, while presenting the government’s initiatives for managing private debt and supporting small and medium-sized enterprises. Below are the key points of interest from the discussion, as stated verbatim.
On the different perception of the country abroad and at home
“This is the duality I experience as a Greek Minister of Finance and as President of the Eurogroup , in my capacity as a Greek. The duality of vocabulary. When we cross the border and find ourselves outside Greece, Greece is viewed through a strikingly positive lens, because we are the country that overcame the existential crisis of the past decade, whether we’re talking about tax evasion, growth, surpluses, or the debt curve. Whatever metric you use—investment, exports…—Greece has made remarkable progress. Progress that is highlighted even more sharply by the challenges other countries are facing. So, there is a very heavy burden when speaking in the capacity of the Greek Minister of Finance at this moment, precisely because of the circumstances that Greek society and the Greek state were called upon to manage over the past decade. That is half of the equation.
The other half is the stark realization that macroeconomic indicators don’t matter to you when you’re standing at the supermarket checkout. So, one must simultaneously strike a balance between the two and establish the connection between how economic progress reaches every Greek household. It’s reaching them more and more, I’ll tell you. In other words, you’re asking me, “Is it working?” (figuratively speaking). When 600,000 jobs have been created, when we have more than doubled our growth rate, when we are on the verge of reaching a historic low in unemployment, and when a series of short-term measures have been implemented—fertilizers, diesel, support for families with children, or tax reform, permanent measures, the abolition of ENFIA in 12,000 settlements... all of these, cumulatively, have a positive effect. It doesn’t solve the problem.
It is part of a path that solves the problem. And every day, every week, every month, the goal is to continuously improve this situation. There is no other way. The only reliable way to support those in greatest need is to build on solid foundations.
So that is what we will continue to do… believing that we are bringing the credibility of our actions. But beyond that, I will tell you that there is also a connection between the national and the European. Greece is implementing many reforms, making many changes, trying to move faster, to attract investment. As parts of the equation are resolved at the European level and all the things we’ve been discussing in Europe for decades are implemented, you will see Greece’s growth rate improve and a larger part of the equation you’re asking me about being resolved.”
On the escape clause
“You all know what the escape clause is. It is a deviation from European fiscal rules; it is our money again. It is a deviation from a new rule introduced at the European level, which states that we agree on expenditures with the Commission. Regardless of whether you have a surplus or a deficit, you can deviate from this based on your own policies, e.g., combating tax evasion.
So what does the European Union allow you to do? To have a deviation, initially regarding defense, following Russia’s invasion of Ukraine.
It was therefore decided that this specific escape clause could be linked to additional investments in energy. And I think the crisis in the Middle East makes this absolutely clear. And in terms of the impact on energy prices and the inflationary effect, the secondary impact on a range of products.”
On the resilience of the Greek economy and forecasts regarding the war in the Middle East
“We know that the European economy has shown resilience. We also know that the Greek economy has shown significantly greater resilience compared to the European average, which is reflected in the growth rate.
Growth in the first quarter was 2% compared to last year and has come from increased investment, from more exports relative to imports, and from the tax reform we recently implemented. Beyond that, if we look at where oil is today—the price per barrel is at $92.
This means that the markets are not pricing in a worst-case scenario. The markets are currently on alert, but they are not exhibiting extreme pessimism. It remains to be seen how quickly the Straits will reopen.
I’ll tell you that there are three factors we’re looking at:
When they will open, how they will open, and what the regime will be in the Straits.
And how extensive the damage to the region’s energy infrastructure will be. So these three factors together make up the “status quo” that will exist afterward.
We will see all of this reflected in prices. In terms of the supply situation, it is a given that Asia has been hit harder than Europe, and Europe has been hit harder than America. But beyond that, prices are global in nature.
Consequently, we are facing this problem on a global scale. Twenty percent of natural gas and oil passes through the Straits, and there are many other such cases. The problem is significant.
But beyond that, we in Europe know that we must do a great deal to better organize our own affairs. Part of it has to do with our own European-style reforms, which we discuss at European Councils. Part of it has to do with investments in energy.
These are absolutely essential for us to reach the point where Europe can thrive—and, of course, every national economy, including our own.”
On private debt and the omnibus bill currently under consultation
“I’m taking a step back because the bill is still under consultation, and we’ll discuss the final parameters once it’s submitted.
I want to focus a bit on private debt because it is very important to me.
I don’t believe that policy is made from on high.
What do I mean? There are people who want to honor their commitments, their obligations to the state, to the government, but they cannot. And this is something that has remained from the years of the crisis.
So as long as this exists… is private debt a problem in Greece? If you look at it as a systemic issue, it isn’t. Because private debt in the European Union stands at 121% of GDP — 94.5% in Greece.
Non-performing loans at banks stand at 3.3%. Last year, we had €6.8 billion in debt restructuring. So if you look at these figures, systemically we are in a much better position than the rest of Europe.
However, as long as there is a single person, a family, or a business facing difficulties, their problem is our problem. That is our job.
So in that sense, we need to create regulations that reward those who are consistent. And regulations that are practical. And I also see how well they’re being received by the public. The increase in the limit on the unseizable account from 1,250 euros to 1,600 —I saw the messages on my phone—has made a huge difference to many people, as it affects thousands of our fellow citizens.”
Regarding the 72-installment payment plan
“Similarly, the 72 installments for old debts until 2023—after which the standard tax regulations from the Independent Authority for Public Revenue (AADE) apply—is something the public had been asking for.”
On the Out-of-Court Mechanism, the Katseli Law, and the Real Estate Acquisition and Leaseback Agency
“For me, the most important tool we have for managing private debt is the Out-of-Court Mechanism, which we see is being embraced by the public. We lowered the eligibility threshold from 10,000 to 5,000 euros.
But for me, you know, Mr. Filippidis, what is most interesting? We’ve been talking about the Katseli Law all these years. Did the Katseli Law work? The Katseli Law, in my opinion, has not worked. First, because it entangled those who needed a solution under the Katselis Law in lengthy legal battles and unjustly shielded many people who should not have been subject to this law behind its provisions.
The out-of-court mechanism is now being transformed into a tool for protecting primary residences. In other words, we are allowing citizens to establish a protection perimeter for their primary residence through the out-of-court process and to say, “This is what matters to me.”
A larger haircut, a smaller installment, if you do it.
It is much more effective for someone who truly wants to protect their primary residence to be covered by this.
Add to this the Agency for the Acquisition and Re-leasing of Real Estate, the Agency that will begin operations in the fall—we’ve been waiting for it for years, that’s true. But it is a complex project, where there had to be a tender, and a contractor had to be selected through the tender. By this fall, all of this will be up and running.
All of this together is a much more effective tool than any we’ve had in the past. And if you put it all together, it’s the largest package of measures for private debt since the crisis.
In a country that is growing, reducing unemployment, and has a rationale for emphasizing that it must help those who are consistent, I think this is the most beneficial thing we can do collectively. The provision will be voted on within the month. We will move very quickly.”
On the tax measures
“Basically, we’ve reformed the way the tax system works. We said we would implement the largest tax cut ever, but it will be guided by a philosophy: we are changing how we tax you based on how many children you have, your age, and where you live (as regards the ENFIA property tax).
This had a very specific structure and philosophy: it recognizes that the demographic problem is Greece’s existential problem—I would say it is Europe’s existential problem, not just Greece’s.
At the same time, it acknowledges that, as far as the middle class is concerned, overtaxation remains a reality. Because we have already reduced 83 taxes and contributions, we must reduce more and more and more. And as fiscal space is created—and this is the priority of this government and this prime minister—I am removing burdens from the economy.
So, we will continue in this direction because, above all, we recognize that this is the most beneficial path for the economy to move forward.
And, since you asked me earlier about the crisis, there has been a revision regarding the crisis in the Middle East; inflation, in general, is being revised upward, while growth is generally being revised downward. You saw that, as far as we’re concerned, there was a downward revision from 2.4% to 2%. Yes. But for next year, the revision is upward, toward 2%, whereas it was lower.
This has to do with the growth trajectory the Greek economy has taken and with the increase in public investment, which is driven by the additional European packages, but mainly by the conviction that —I’m toying with the idea of putting it this way—money isn’t there; it’s created. The economy must generate money, and that is the path we intend to follow in the coming period: mergers and acquisitions.
We are, therefore, on a path of qualitative change regarding what Greece is economically. And I believe that by building on the good things that have come before and constantly improving ourselves, we will be able to achieve what the country is truly capable of achieving.”
On SMEs and the tax prepayment
“I could talk at length about all those measures introduced during the years of the memoranda or the crisis, which must be removed, one by one. I won’t hide it from you—I, too, have a long list of things I’d like to see removed quickly. But what gets removed depends on what you can remove. What is the fiscal space? Fiscal space depends on the fiscal rules we have before us. It is no longer the surplus; it is that portion of the surplus that I can spend within the framework of the fiscal rules.
So, the amount we’ll have for permanent measures, based on a prioritization that includes the obvious, depends on how much room we have. Consequently, many of the things you’ll ask me about are on the table; I’m not going to confirm any of them. The idea is that we can actually achieve this. Because, look at what the problem is. You say, “Take the entire tax prepayment”(we collect about 8 billion euros). In other words, you have to assess, for the one-year transition period, what the fiscal impact of the implementation will be. You can’t do everything. Whatever you do, you have to do it with care and calculation. A lot can be done. On the strong foundations that have been built, even more will be done.”
On the future after the Recovery Fund
“I would say that I’m glad the entire loan component has been exhausted, because we’re talking about 27.5 billion in total investments. However, it hasn’t reached the recipients yet; the total investments amount to 27.5 billion, there are 798 contracts in total, and 60% of them involve small and medium-sized enterprises.
So, if you look at the big picture, the investments that will be made are extremely significant. Obviously, as the responsible deputy minister, Mr. Papathanasis, a situation where we were struggling to get investment plans out of the drawers, and as soon as the “deadline” was announced, as soon as the deadline was set, more came out. This is something we’ve grown accustomed to and have seen many times in Greece.
I would say that I am glad these plans exist, and I am glad that the banking system, in cooperation with the Recovery Fund, is financing them. I hope that many of these will be funded even without the Recovery Fund’s assistance down the line, because many of these projects are of exceptional quality. Overall, however, I would say that all of this is driving investment.
Many people ask, “What comes after the Recovery Fund?” I’ll tell you that, on the one hand, you have all the state funds, the increase in public investment I mentioned earlier, the new NSRF, and the new funds coming from Brussels. That’s part of the answer.
The fundamental answer is a change in mindset. The one that enables you to create European champions. To grow Greek businesses. To generate growth, money, and economic activity. And we’re there. We are now on the verge of claiming our place there. Especially when compared to other European countries, which currently have a lower growth trajectory. They view certain things with more apprehension. Greece is opening up. And the more it continues in this direction, not only will jobs be created—because unemployment is at a historic low—
We’re ready to achieve it. We’ll be there soon. The goal now isn’t just to reduce unemployment further. The goal is better-paying jobs. And I think we’re close.”
On the growth strategy for Greek businesses and their position in the global competitive landscape
“The strategy must be primarily European. In other words, there must be a mosaic of creating European champions, creating ecosystems around large companies that can play this role in global competition, and within this, Greece must find a position, a place that allows many of these companies to grow. I wouldn’t be quick to say that there are so few companies in Greece that can grow.
I am much more optimistic about this exercise and this analysis. And I think that by becoming part of a broader strategy, a broader puzzle of mergers and acquisitions that increases scale across every sector of the economy, we will see many Greek companies playing this role. And of course, we will also see many companies in Greece becoming part of a European strategy, which—if I may say so—is much better. It is very healthy, it increases scale, and it improves services and prices. All of this has a positive and multiplier effect.”