Mr. President of the Hellenic Association of Entrepreneurs, I thank you warmly for the invitation, for your introduction, and for the detailed presentation of your Association’s proposals, which will certainly be evaluated by the Finance Ministry and the government in general, because they are specific and practical in nature, and are thus part of the social dialogue, the government’s dialogue with the productive agencies, with the social partners; a dialogue that we want to see produce practical results, given that our goal is to conclude a real national, productive and growth-oriented agreement, without which we will be unable to achieve the goal of reconstruction, of rectifying Greece, to use an historical term regarding the Greek economy, as used by Eleftherios Venizelos in the early 20th century.
All of the productive and creative forces of Greece must be mobilized, and the business world is certainly being called upon to play a decisive role, because without entrepreneurship, without risk, without the pursuit of profit, there is no employment; there is not simply no profit, but also no social wealth.
Mr. Finance Minister, Mr. Secretary General, Mr. former Minister, ladies and gentlemen Ambassadors, ladies and gentlemen, dear friends, as the President of the Hellenic Association of Entrepreneurs said, when I accepted the invitation to speak this year, once again, at the Conference you are hosting, we had not decided to transform this week, the first week of the third session of the Hellenic Parliament, into a week of political tension, with substantial content, due to the vote of confidence.
We took, with the Prime Minister last week, what I believe to be two very important political decisions that bear directly on the economy. We decided, first, to announce in a frank and binding manner that the process for the election of a President of the Republic will start in February, a month before the expiration of the outgoing President’s term, as provided for by the Constitution and parliamentary practice, thus putting to an end the meaningless and perfunctory scenarios for accelerating the political processes, for early elections; scenarios that work to destabilize and undermine the country’s economy.
And second, we took the initiative of requesting reaffirmation of the Parliament’s confidence in the government, not to count the given MPs of the stated parliamentary majority, but because this process is the chief parliamentary process that allows us for three whole days, in Parliament, to set out what has happened, but mainly to present the comprehensive plan for the definitive exit from the crisis and the Memorandum, the comprehensive plan for the country’s turning a new page.
In other words, we are responding to the most important conditions for the recovery of the economy, which are the political and institutional conditions. Political stability and respect for the principle of the continuity of the state. The biggest problem the Greek economy has right now, as a real economy and as a financial sphere in the international markets, is the political uncertainty being created with regard to whether or not a President can be elected, with regard to the time of the elections.
To speak clearly, the opinion polls, too, which show a specific balance of power between the political parties, are also destabilizing in effect.
Because there is no consensus, there is no responsibility on the part of the opposition – and not just the main opposition party – so the Greek people must know that this political uncertainty that is being created for institutional reasons – because it coincides with the election of the President of the Republic – but also for petty political reasons, because the forces of the opposition put their party interests first, and they want to invest in a strategy of supposedly rising to power, this works to undermine both the negotiations and the country’s definitive and safe exit from the crisis, particularly during these months when we have to close the revision we carried out with the troika, we have to finalize the environment within which we will be moving following the completion of the programme; we have to clarify our relationship with the International Monetary Fund, in a friendly manner, but in a manner that benefits the country and the Eurozone.
And of course we have to confirm the sustainability of the Greek public debt, which is confirmed every week by the eminently competent head of the European Stability Mechanism, Klaus Regling, not because he agrees with me, but because he knows the reality of the situation and the numbers, because he is the country’s real lender, and we have to create an environment that has the requisite security, optimism and outlook.
Note that there is a very clear dilemma here. The government, the forces of responsibility, are here with a comprehensive exit plan with a beginning, middle and end, which we want to transform, and will transform, before the presidential election in February, into an exit agreement between Greece and its partners.
On the part of the oppostion there are ideas, contradictions, uncertainty, irresponsibility. Many believe that we have overcome the crisis and can thus try uncertainties.
Five years of effort, five years of harsh sacrifices can be destroyed in five days. Five days are enough to take us back to where we were in 2009. To primary deficits, to lack of credibility, lack of prospects, the devastation of competitiveness.
There is no future without hope and prospects. But there is also no future without awareness and prudence. And this is something that the Greek people will weigh with their instinct.
Beyond the political and institutional conditions for reconstruction, the fiscal conditions are also obviously of huge importance. It was no accident that we achieved, in an impressive manner, the country’s fiscal goals. This happened because the people made sacrifices, but also because some – we, that is – took on a huge, disproportionate, unfair political cost.
Does anyone want to come in for criticism? To be unpopular, to be disliked, to come under constant pressure, taunts, insults, jeering? Why? How difficult is it for one to be a pleasant demagogue, populist? How difficult is it for one to promise the impossible, to repeat practices of the past?
How difficult would it have been for me to go to the TIF a few weeks ago and promise €20 billion in social spending? Or the Prime Minister? And hasn’t it been done again and again the past? It has. Haven’t we learned anything? Was it to be expected that the main opposition party would go and promise €20 billion in social spending?
He says not, it’s not 20, it’s 10. And I say, why 10, why 20 and not 30? Why should we not return to the primary deficit of 2009, which was a primary deficit of 12.5% of GDP? Everything can be done with great ease. So the choice we made is important, the choice we made to support the Greek people.
This government has not come to power on its own, saluting the flag. It is here because it was elected by the Greek people, in awareness of the consequences of the law of 2012. Twice, under tough conditions. The Greek people, by a large majority, a majority of 48% in total, voted in favor of this national strategy.
And this national strategy that was, you will allow me to say, solely the strategy of Pasok, which was adopted afterwards by New Democracy, the Democratic Left for a short time. This is the strategy that produced the primary surplus of 3% for 2015, of 2.9%, the fiscal deficit of less than 1%, when the European benchmark, as you know, of the Stability Pact, is 3%, and a great deal of fuss is being made over this right now, with countries like France and Italy, but it is not just the fiscal deficit, the primary surplus anymore.
It is also the other pillar of the deficit of the current account balance, the redressing of which is due to a great extent to the recession, but it is nevertheless a fact that from a 15% deficit in the current account balance, we have now reached a surplus, and this enables us to work on the new ways to strengthen the competitiveness of Greece’s real economy.
So, behind all of this there is the major move of the PSI, the drastic haircut of the debt, the even more drastic restructuring of the Greek public debt.
As I said in an interview of mine on Sunday, when we were coming back, they were on their way there. Because we are seeking things that happen. And the haircut happened. And the freezing of the grace period happened. And the major extension happened. We currently have servicing of the public debt that is about 60% lower than before the haircut, on a yearly basis. This allows for a change in the reality of the situation as concerns the primary and fiscal deficit.
We have an average duration of 16.5 years, 2.5 times the European average. We have impressively lower interest rates – the average interest rate is 2.1%. And of course we have expiration dates that are as well timed as possible; we have a debt that is serviceable and sustainable for at least 10 years, according to Mr. Regling, but in ten years the state of the whole real economy has changed, the denominator has changed, GDP has changed, the rate of growth has changed, and thus the geometric development of the debt.
Anyone talking about unilateral actions, sometimes about freezing, sometimes without knowing precisely what they mean, wants to once again hang the country out in the international media, at a time when the country has, on very satisfactory terms, been accepted back into the international markets.
So it is of very great importance for us to believe in this, it is of very great importance for us to believe in a nationally owned plan of structural changes, and, of course, the return to the normalcy of a member state of the Eurozone is not a return to the past. It is a return to the future. Because it mean a great deal.
It means that Greece is again equal in Europe. And this will happen without additional taxes, with gradual tax reductions, without reduced pensions, without wage reductions.
I know that we couldn’t make a comprehensive taxation system in the past five years, because there were pressing needs. We were scrambling to meet cash needs, urgent fiscal goals.
We had at the same time to make structural changes, to combat tax evasion and the informal economy, while also supporting businesses, covering cash needs and discussing a comprehensive taxation system. This isn’t easy.
There are emergency measures, there are temporary measures, there are contradictory measures, there are measures that have proven ill conceived. We had to do whatever necessary to achieve our goal. Now we can make corrections.
We had agreed to impose an extraordinary levy on businesses – 2% -- and we did not impose it. We are heading towards lightening wage costs – direct and indirect.
And of course we are well aware that we also have to look again at the growth and social dimension of our tax system, through the logic of relief and rationalization.
But you see that the VAT on catering concerns remained at 13%, and the Special Consumption Tax on heating oil was reduced, and the solidarity contribution is being reduced significantly, by 30%. And we are now at a critical stage in the negotiations.
We will have the opportunity to move ahead at a much faster pace and much more comfortably discuss all the proposals put on the negotiating table through the social dialogue, as the President of the Hellenic Association of Entrepreneurs did a short while ago.
The conditions exist – financial, credit extension, liquidity – but the banking system had to survive. How did the Greek banking system survive? How is it that the country has four large, systemic banks that right now can function as a pillar of the reconstruction of the Greek economy? We protected the banks, we didn’t protect the bankers. The old shareholders paid a very heavy cost.
And of course it is of very great importance that the stress tests be completed, so that the banks can feel secure – and they are secure – so that they can more easily move ahead with their interaction with the real economy, with strengthening entrepreneurship, with real credit extension, and not just refinancing of old loans.
That is why it is so vital for the banking tools and non-banking financing tools – the NSRF, the CAP, the new institute for growth – be utilized in tandem. And of course this is also linked with the regulation of social security and tax obligations, the reductions in fines and surcharges, payment by instalments, so that payments can really be made.
And of course I also welcome the Development Minister. The effort that is being made for the so-called red loans, unserviced loans – first those to businesses, and then we will see about housing loans – is very great, and the intervention here is liberating for the real economy, for small and very small businesses, but also for medium-sized and larger enterprises.
The intervention is radical, it will be completed, it will be presented, it will be implemented. It will bring huge relief, but with a banking system that can bear it, that is not compromised in terms of availability of adequate capital, while the real economy benefits.
The depositor must not be burdened, the taxpayer must not be burdened. And those who owe must be facilitated, without compromising the stability of the banking system. Look at how difficult the equation is, because someone pays in the end.
So we want a fully protected depositor. We want a Greek taxpayer who is not burdened due to the banking system. We want banks that are absolutely stable, and we also want businesses to breathe and recover, which they can do via the model we have prepared.
And of course the business and investment environment is changing. This does not depend solely on the legislation or on the government. There needs to be a much more substantial contribution from the judiciary, from public administration, public administration services, local government, local societies. Because legal certainty cannot be provided by the government alone – others have to do their part.
And of course there is the responsibility of the business world, the responsibility of the factor called capital. We have reduced the cost of labor. We know that there is a very high cost of money, high energy costs, but there is a major issue in Greece of the productivity of capital. If the productivity of capital is not increased through innovations – innovations that can be anything from technologically complex to organizationally very simple – we will not be able to take our place within European and international competitiveness.
So the responsibility of the business world is very great from this perspective, and this is of very great importance for employment and for employment sources, and the employment clause is extremely important to us.
Thus labor-intensive enterprises must feel that they have support, and there are whole sectors that are labor intensive, with tourism topping the list in Greece. And this concerns sectoral policies, to the extent that we can and are developing them.
Before the European elections, I said, as the President of Pasok, that 640,000 jobs can be created in over the next five years. And the Research Directorate of the National Bank of Greece presented the potential for the creation of 720,000 jobs, so that you can see that we are saying things that are specific and not overblown.
There are sources of employment, and the picture will change at a geometric rate as long as we move ahead on these things, first with the political conditions that I mentioned.
The primary sector has vast potential, energy, smart buildings, infrastructure. The European Commission has already consented to front-heavy initiatives and actions with regard to the NSRF, so that there is no gap, and this of course also concerns the creation of new enterprises.
But we need labor peace, and it is very significant that employers, employees, the Ministry went to the ILO and we had the text agreement we had in Geneva, a few days ago, on labor relations. And of course great care for social cohesion and the support of vulnerable groups, through the social dividend and minimum income.
So there is the national plan for reconstruction and structural changes for a social state. We have a national timeframe, we have national ownership of the structural changes. We need national consensus, because this is unfortunately absent on the political level. But nor does the national productive agreement – of which I spoke earlier, and of which you must be a part – exist as a climate in the public dialogue.
Thus will we proceed to exit the memorandum and the troika, and move on to a post-programme period that will not be a programme with a memorandum and troika, but a programme based on the existing European institutions and mechanisms.
The country can and will achieve this in the coming months, which will be decisive for the coming decade, for the decade that will bring Greece back to the position it deserves in Europe and in the world.
Thank you.
October 7, 2014