Greece’s new finance minister to push ahead with tax cuts

International News

Greece’s new cabinet pose for the photographers during the swearing in ceremony at the Presidential palace in Athens, Tuesday, July 9, 2019. Cabinet has been sworn in, two days after conservative party leader Kyriakos Mitsotakis won early elections on pledges to make the country more business-friendly, cut taxes and negotiate an easing of draconian budget conditions agreed as part of Greece’s rescue program. (AP Photo)

ATHENS, Greece (AP) — Greece’s new government will press ahead with tax cuts for households and businesses despite skepticism from creditors, the country’s finance minister said Tuesday after he and his Cabinet colleagues were sworn in.

Christos Staikouras’ comments during a handover ceremony at the ministry came a day after Greece’s creditors during the recent bailout years insisted key budget targets committed to by the country’s outgoing government must be adhered to.

Conservative party leader Kyriakos Mitsotakis won Sunday’s election on pledges that included making the country more businesses-friendly, cutting taxes and negotiating an easing of draconian budget conditions agreed as part of the country’s rescue program.

His new Cabinet, which relies heavily on experienced politicians who have served in previous governments but also includes non-partisan technocrats considered experts in their fields, was sworn into office Tuesday.

“Our central aim is to create the conditions for a high and sustainable development with healthy public finances and a stable banking sector,” Staikouras said during the handover of the ministry from his predecessor, Euclid Tsakalotos.

“We will go ahead with relieving the tax burden on households and businesses,” said Staikouras, an economist and engineer who comes to the post with the experience of serving as deputy minister under a previous government during Greece’s financial crisis. “We will promote production, productivity, competitiveness, quality, adaptability and an outward looking approach of our economy.”

The incoming government’s promise to lower taxes and calls to ease the strict budget targets was bluntly rejected by Greece’s creditors even before the new ministers had been sworn in.

Finance ministers from the 19 European Union countries that use the euro currency, known as the Eurogroup, met in Brussels Monday evening and insisted key budget targets must be adhered to.

“Commitments are commitments, and if we break them, credibility is the first thing to fall apart,” Mario Centeno, president of the Eurogroup, said after the meeting. “That brings about a lack of confidence and investment.”

Greece depended for eight years on rescue loans from other European Union countries and the International Monetary Fund in return for deep reforms to the country’s economy that included steep tax hikes and major spending cuts. The financial crisis saw unemployment and poverty levels soar.

Greece’s third and final international bailout ended last year and while the country doesn’t rely on direct funds to meet its debt repayments, the previous government of Prime Minister Alexis Tsipras agreed to meet a series of budget targets over the coming years, even decades.

As part of those agreements, Greece has pledged to achieve government budget surpluses, before debt costs, of 3.5% of GDP for the coming years. Critics say that requirement has shackled government spending and stifled the country’s recovery.

As a result of those agreements, Greece remains under strict surveillance from its euro partners.

Staikouras said that unlike frequent practices at ministry handovers during a change of government, he would not say everything his predecessor had done was wrong.

“We will maintain any positive things that were done and we will build on them,” he said. “But we will correct mistakes and deal with any oversights.”

Other key positions in the new Cabinet also went to seasoned political veterans. The foreign ministry was given to Nikos Dendias, who held previous Cabinet positions in the ministries of development, defense and public order, while a former public order minister under a previous socialist government, Michalis Chrisochoidis, takes the reins of the ministry once again as one of Mitsotakis’ non-parliamentary appointees.

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AP’s full coverage on Greece: https://www.apnews.com/Greece

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