The government’s growth strategy for post-memorandum Greece aims at creating a new identity for the Greek state, based on social welfare, fairness and productivity outlining the government’s vision for promoting sustainable growth and a successful exit from the adjustment programs. This Strategy aims to:
- Reverse Greece’s deindustrialization and the restore productivity and competiveness.
- Develop skilled human resources
- Upgrade infrastructures (transport, digital technology, energy)
- Exploit the country’s comparative advantages
- Transform the country’s production model
The growth plan identifies 7 specific key sectors that can support productivity and competitiveness: Transport, Infrastracture and Logistics, Energy, Agri-Food, Manufacturing, Shipping, Pharmaceuticals, Sustainable Tourism. The main policy objectives outlined in the govermentn’s plan are: ensuring fiscal sustainability, fostering sustainable growth, boosting exports and attracting foreign direct investment, boosting start-ups and SMEs, establishing structural conditions for growth, ensuring fair and inclusive growth and finally, making use of financing tools. The government will also roll-out specific actions such as restoring collective bargaining, designing a gradual rise in the minimum wage, establishing a development bank and encouraging private sector investment in research and development.
This approach of the Holistic Growth Strategy drew upon the conclusions of the Regional Growth Conferences, where it emerged clearly that we need to maintain reform momentum, as well as create and enhance all institutions. It should be stressed that the Holistic Growth Strategy integrates a social pillar concerning not only social justice, but also ensuring an equitable and inclusive growth, which benefits all.
Return to consistently positive growth rates (1.4% of GDP for 2017) driven by investments (+9.6% annually) and exports (+6.8% annually). Real GDP growth in 2018 is expected to pick up to 2.3%
Fiscal consolidation achieved through structural and fiscal measures in the areas of expenditure (54.8 in 2018) and revenue (45.2% in 2018). The primary surplus in 2017 would be 4.2% of GDP, against a target of 1.75%, according to recent estimates.
Public Finances and Tax Policy
Implementation of important structural reforms to reinforce public finance management, the most crucial being:
- Strengthening of the mechanisms monitoring the implementation of the budgets of all general government entities
- Establishment of the a National System for Online Contracts to ensure transparency in public procurement
- Establishment of the Independent Authority for Public Revenue
Tax Policy aims to gradually reduce the tax burden and introduce a permanent tax system
Certain short-term debt relief measures were introduced at the beginning of 2017. Medium-term measures are expected to take effect after the end of the program, even though the extend and scope of these measures has not been decided yet.
2. Sustainable Development
Creating more and better jobs
The priorities for the design of labor market are as follows:
- Eliminating undeclared work
- Creating more and better jobs, while raising the minimum wage
- promoting effective social dialogue through restoring collective bargaining
- protecting the unemployed, through strengthening active employment policies
The government has identified the key sectors of the Greek economy as well as the sectors in which the country has a comparative advantage and seeks to develop, such as:
- Transport and supply chain
- Agri-food products
- Pharmaceutical industry
- Health and the environmental economy
The development of high quality research in higher education institutions and research organizations is supported through the establishment of the Hellenic Foundation for Research and Innovation (HFRI), while specific financing tools for innovative enterprises are also envisaged.
Attracting foreign direct investment (FDI)
The government has designed and implemented a National Action Plan to boost exports and improve the extroversion of the Greek economy (reviewing the legal framework for strategic investments, introducing a fast-track procedure, adopting a new development law to accelerate large-scale investments).
Building a modern state
The modernization of the Greek state was a necessity. Therefore, in this direction, a series of reforms related to the public administration and the fight against corruption were designed as well as:
- Alternative Dispute Settlement (Mediation and Out-of-Court Settlement of Debts),
- One-stop shops for the establishment and licensing of businesses,
- Spatial planning for land use at national, regional and local level
3.Structural Conditions for Growth
In addition to the development of the infrastructure, transport and energy networks discussed above, the strengthening of the digital economy is crucial to the country’s economic transformation.
The main priorities of the National Digital Strategy adopted in December 2016 are:
- Ensuring inclusive access to digital infrastructures
- Accelerating high-speed internet access
- Providing assistance to economic sectors and small/medium-sized businesses
Managing State Assets
The Greek State possesses significant assets related to the participation in public enterprises and real estate. The management of public property, with a view to promoting transparency and efficiency, is carried out by the following organizations: the Hellenic Corporation of Assets and Participations (HCAP), the Hellenic Republic Asset Development Fund (HRADF), the Public Properties Company (PPC), the Hellenic Financial Stability Fund.
4. A fair and inclusive growth
- Promoting a socially oriented economy: promoting the development of productive and sustainable initiatives, based on the values and objectives of the social and cooperative economy. A National Cyclical Action Plan is being prepared, including funding and incentives to boost knowledge, promote business opportunities, create effective governance structures, and move the economy towards a new model of sustainable production and consumption patterns.
- Ensuring regional development and cohesion: with a view to enhancing national cohesion and reducing regional disparities, 13 Regional Conferences for Productive Reconstruction were held, the conclusions of which will be integrated into policy-making at national level. At the same time, an integrated set of policies for the islands (improvement of access, upgrading of infrastructure, etc.)
- Inclusive education: the main objectives are modernizing educational structures, improving educational results and integrating graduates into the labor market. The reforms cover the entire range of education, from pre-school to third level education, while professional education and training programs are being upgraded.
- For a comprehensive and effective Health System: access for uninsured citizens to the National Health System was ensured and a public entity was established in order to rationalize spending and fight corruption in the public health system. Measures are promoted for more efficient hospital services, pharmaceutical cannabis production and medical tourism.
- Introduction of a system of social solidarity income for vulnerable social groups. Social protection is enhanced by additional services and benefits in kind.
- The new generation is at the top of the agenda: an integrated strategy “Youth 17-27”, which sets out as priorities (a) strengthening of youth, economically and politically, (b) facilitating the transition from childhood to adulthood, (c) implementing targeted measures to accelerate the integration of young people into the labor market.
5. Financing Development
- Public Investment Program: It is made up of national public resources and resources from the European Structural Funds. The PIP is allocated a budget of 6.75 bln euros for 2018 and 7.3 bln annually for the period 2019-2022. It is estimated that within the next five years 40-50 bln will flow into the economy, taking into account money disbursed from International Financial Institutions.
- Mixed Financing: Programs employing private and finance capital in combination with public resources to finance SMEs and start-ups (for example, EquiFund).
- The New Development Law 4499/2016: It aims to create over 11 bln of private investment until 2023, by providing incentives to the private sector.
- Establishment of a Development Bank: in order to facilitate access to funding for the SMEs, business start-ups, cooperatives and social enterprises. Additionally, the Bank will coordinate the use of all available financial tools, advise companies and provide know-how to the public sector.
- Financial Sector: The main priorities for the transformation of Greece’s financial sector up to 2021 are: (a) The strengthening and expansion of the sector (b) The reduction of the number of non-performing loans (NPLs) (c) The improvement of the governance of the banks and (d) The easing and eventually the abolishment of capital controls.