Athens, 14 Jun 2009 

Interview of the Minister of Economy and Finance to the newspaper “Vima tis Kyriakis”, given to the journalist Vasilis Chiotis

What is the most important message that emerged from the result of the elections for the European Parliament?

It is a clear message of disappointment and sometimes anger. Anger over certain political behaviours that do not befit the values and principles of our party; disappointment because we failed to exhibit the necessary willingness and effectiveness in certain areas of our policy. We realize we have let down a section of our supporters.

You mean to say that the message has been received...

Rest assured that we have received the message of these elections. And we are evaluating it. Because I hear certain people claiming that the government has not received any message, I would like to stress that we need to be more sober. Things can not change in a matter of days. We are already making our first moves. By this I am referring specifically to the issues of public safety, where we have already taken the first decisions. I wholeheartedly believe that the message of disillusionment can be transformed into a new relationship based on trust, effectiveness and zero tolerance to compromising behaviours.

In the current political climate, can the government draft and pass a new budget without first renewing its mandate?

Constitutionally, the government has a four-year mandate. Certainly it is facing political difficulties. But this is not because we lack the political mettle to draft the budget. It is also the case that no other political party, no other political power has so far appeared willing to contribute in the endeavour to solve the economy's problems. The government is alone in its effort to stabilize the economy while the Opposition is promising everyone the world, effectively duping the citizens.

You have spoken of changes. Do you believe that ND can not continue until the next elections with the current cabinet?

What was condemned during the elections for the European Parliament is not the cabinet as a whole, but poor performance in specific areas. This is why I firmly believe that we need to change everything that has rankled and angered the citizens. I would like to note, however, that the national elections and the elections for the European Parliament are two different things. There was nothing at stake in the elections for the European Parliament. This is why 48% of the voters decided to abstain. Furthermore, another significant portion of the citizens decided to convey a message of discontent by voting for smaller parties. I would like to remind you that in 1999 the Simitis administration lost the elections for the European Parliament by a margin of more than 3%, yet managed to win the national elections in the following year. The result reveals that the citizens, especially those who had voted for Nea Demokratia in the national elections, were not convinced by the scandal-mongering and the alarmist strategies promoted by PASOK, and so they decided to abstain.

Early this week in Brussels you pledged that by the end of this year deficit will be reduced to 3.7% of GDP. This means that by the end of 2010 you must save resources amounting to approx. 3.4 bn. euros. How do you plan to achieve this?

The commitment we took on in Brussels is no different to what we pledged to the Greek people before the elections. We pledged that in June we shall evaluate the course of the economy and then take the necessary decisions. I would like to emphasize that there will be no more lies and excuses. We will either reduce debt and deficit or we will really go down all together. There are no magical solutions for reducing deficit. We will either reduce expenditures or increase revenues or both. The government has announced an ambitious plan to curtail public expenditure, and by the end of June it will evaluate the progress of the budget's execution, as well as the economic fundamentals. If it becomes necessary, we will take further measures. The endeavour to achieve the goals we have set is not piecemeal, especially in circumstances of economic stagnation, yet we will do everything in our power to accomplish them.

If the situation is so difficult why not ask for an extension from Brussels so as to achieve a less hurried and more moderate fiscal consolidation?

If we were to ask for an extension now, without having tried to proved that we are doing everything possible, we would be sending out the wrong message to the markets and our EU partners. We would be undermining our country's credibility, when our goal is to enhance it and earn the trust of the markets. Obviously, this would be nothing short of catastrophic for both our economy and our country.

So the only way available to you is the path of savage retrenchment for the next 18 months...

I have never spoken of such conditions. I will grant you that it will not be easy to achieve our goal. Yet I refuse to accept exaggerations. I too read various analyses in the newspapers claiming that we need 3, 5, 7 or any number of billion euros and other such scenarios. The real figures will result from the evaluation which is still ongoing. And I would like to note that we are already implementing policies designed to minimize the weight citizens have to shoulder. The new method of collecting assessed debts will bring in at least 1.8 bn. euros in 2009 and even more in 2010. This concerns the few that are in arrears and not society as a whole. By reducing elastic public expenditure by 10% we are curtailing the squandering of public funds and benefitting Greek society in its entirety. The new system of public healthcare expenditure, through which we expect to save at least 500 million euros in the next three years, will benefit many. We will also reap significant advantages from containing extravagant pharmaceutical spending.

From what you are saying I gather we will not avoid new taxes, notwithstanding the Prime Minister' s electoral pledges.

We have all heard the Prime Minister, three days before the elections, stating in an interview that in June we will assess the progress of the budget's execution, and, if necessary, we will make the required adjustments. If these must include imposing further taxes, this is what we will do. This is exactly what I have said before the election. We have never tried to brush the truth under the carpet, like everyone else.

All those who are so vocal about the new taxes remain artfully reticent about the tax cuts already carried out. For example, the gradual reduction of tax rates on natural and legal persons from 40% and 30% to 35% and 25% respectively in 2007-2009; we have also pledged to further reduce them to 25% and 20% in 2010-2014, notwithstanding the recommendations of the International Monetary Fund that we should postpone these tax-cuts.

Are you not alarmed by the fact that the imposition of new taxes might prove detrimental for your re-election in Athens?

When one is determined to exercise serious and responsible policies, it follows that one must be ready to shoulder any personal political cost. But when one has to take necessary decisions for the good of the country, this responsibility must take precedence over considerations about political or personal cost.

Of the all the measures we have been hearing about concerning the increase of public revenues, which ones is the government considering seriously?

Please understand that such measures are not to be prefigured, but announced. It is natural to have various scenarios circulating. Yet the policy of an administration is judged by the decisions it takes and implements. Most importantly, it is judged by the results brought about by these decisions.

In any case, Mr. Minister, it is the usual beasts of burden (pensioners and wage earners) that are being called upon, once again, to pay the extra taxes. The dutiful tax-payers that in 2004 paid taxes corresponding to 7.1% of their income in 2009 are called to pay taxes increased by 45%.

I object to the phrase "beasts of burden" used to describe dutiful tax-payers. I believe that degrading through such identifications to those who strive to pay their taxes promptly and possess a tax-conscience is entirely misguided. Dutiful tax-payers are aware that this administration has reduced tax-rates on natural persons and has abolished inheritance and parental donation taxes. They are also aware that their rent is 3% less, because Nea Demokratia has abolished the revenue stamp on residences. So let us not try to distort reality. At long last, in Greece we should begin debating issues relying on arguments and facts.

Yes, but these are the people that will pay. Not tax defaulters, about whom we have been hearing since the time of your predecessor, Mr. Alogoskoufis, they would be loosing their sleep; yet they are still sleeping like babies...

They are not sleeping like babies at all. Clamping down on tax-evasion indeed requires continuous and persistent efforts. If you take a look at the announcements made by the Special Control Service (YPEE) you will find many cases of gross tax evasion are being persecuted. This effort is already underway and will be intensified in the coming period. It will take constancy and continuity for such a policy to bear fruit. The state mechanisms need to operate without distractions, on the basis of a goal-oriented agenda. We also need austere internal auditing so as to have the service really serving public and not private interests. We also need a change of mentality. Today it is the consumer that many times shies from asking for a receipt, while business owners and other professionals feel no qualms about openly tax-evading.

Even if you deal with the issue of deficit, we still have the unsolved problem of public debt. Is there some feasible solution to this?

In order to curtail public debt one must stop producing deficits. Not only in the government but also in the public utilities. One by one, the public utilities should start operating on the basis of their real capabilities. They should not burden Greek tax-payers with new debts and deficits. This is why having sold Olympic Airways we are moving to OSE (Hellenic Railways). We should have already solved the great problem we have inherited. Yet, as people say, better late than never. At the same time we are moving ahead with the procedures for investigating alternative solutions for DEPE (Public Gas Corporation SA) and, apart from the already announced mergers and abolitions of more than 255 public sector bodies in the coming quadrimester, we are moving to the second phase of mergers and abolitions for the remaining public sector bodies.