Greece eyes stronger growth, more tax cuts next year

ATHENS (Reuters) - Greece is confident of strong economic growth next year, Finance Minister Christos Staikouras said on Tuesday, promising further tax cuts and more investment in 2020.

FILE PHOTO: Greek Finance Minister Christos Staikouras speaks during a parliamentary session before a confidence vote on government policies in Athens, Greece, July 22, 2019. REUTERS/Costas Baltas

Greece emerged from international bailouts in 2018 after a huge debt crisis that wiped out almost a quarter of its economic output. Its fiscal progress is still being monitored by its lenders, the European Union and the International Monetary Fund.

“Greece is returning to normality and that is being recognised domestically and internationally,” Staikouras said during an economic conference.

Athens expects growth of 2.0% in 2019 and 2.8% next year, according to its 2020 budget, outperforming the euro zone average.

The conservative government, which came to power in July, hopes to attract foreign investment to cement the country’s economic recovery.

Greek central bank governor Yannis Stournaras told the conference that despite adverse economic conditions, Greece could “achieve growth of 2.4-2.5% when in the euro zone growth is projected at around 1%” next year.

Athens last week repaid some expensive loans from the IMF.

It has also submitted a bill to parliament cutting the corporate tax rate to 24% from 28% and lowering the tax rate on dividends to 5% from 10% which will be voted on this week, Staikouras said.

This month it plans to hand out an income boost, a so-called social dividend, to about 200,000 Greek households, due to its fiscal outperformance.

Staikouras said Athens and its international lenders have agreed that there is fiscal room of 1.2 billion euros for further tax relief next year.

In the longer term, Greece hopes to convince its foreign creditors that its targets for a primary surplus of 3.5% in 2022 and of 2.2% thereafter and up to 2060 can be lowered.

Stournaras said he believed the European Central Bank’s new President Christine Lagarde, who served as managing director of the IMF during the Greek crisis, would support the country.

“Lagarde is very experienced, knows very well what happened in Greece, and I believe she will stand by us (Greece) as did Mario Draghi,” he said.

Reporting by George Georgiopoulos; Writing by Renee Maltezou; Editing by Christina Fincher and Ed Osmond