MacroPolis

As it has been for the past few weeks, the economy proved to be the main political battleground on Friday, when Prime Minister Kyriakos Mitsotakis and opposition leader Alexis Tsipras battled it out in Parliament.

After more lengthy negotiations, eurozone finance ministers arrived at an agreement on Thursday night to add to the measures that have already been announced to combat the economic impact of Covid-19.

Tuesday’s Eurogroup teleconference ended in disagreement and is set to be repeated on Thursday, although Greece did secure a boost from the European Central Bank, which decided to allow Greek sovereign bonds to be used as collateral by local banks.

The Greek government will be watching Tuesday’s Eurogroup with a keen interest as it tries to adapt its ongoing response to the economic impact of the coronavirus crisis.

Prime Minister Kyriakos Mitsotakis and eight other European leaders wrote a letter to European Council president Charles Michel on Wednesday, ahead of Thursday’s teleconference, arguing for a coordinated eurozone-level response to mitigate the impact of the coronavirus pandemic on member-states’ economies.

The government is lining up a new set of economic measures to help businesses struggling due to the impact of the coronavirus after receiving the all-clear from the Eurogroup regarding this year’s fiscal target.

Greece is introducing tighter measures to discourage social gatherings, in an effort to put a stop to the widespread breaches and circumventions of the first wave of emergency measures introduced last week.

Piecemeal process likely in drive for more fiscal space

It is becoming increasingly clear that the Greek government will have to be patient in its bid to gain greater fiscal space, a move that would allow it to live up to its promise to voters of easing the tax burden.

Monday’s Eurogroup in Brussels will provide the first opportunity for the Greek government to sound out European officials regarding its efforts to create more fiscal space, while discussions will continue in Athens this week regarding the fifth enhanced surveillance review.

Speaking to business leaders on Monday, Prime Minister Kyriakos Mitsotakis set out his government’s economic priorities for the year, reiterating New Democracy’s determination to create more fiscal space for tax cuts, a move that will also depend on the acquiescence of Greece’s lenders.