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Greek PM gets 'show me' treatment from investors
FOR a glimpse of what life under Kyriakos Mitsotakis may look like, Greeks need only to look over their shoulders to five years ago.
As the country plumbed the depths of its financial crisis, Mr Mitsotakis, then the administrative reform and e-governance minister, oversaw the firing of thousands of state employees on demands from creditors. He then scrapped the right of civil servants to take six extra days off a year if they worked at computer screens for more than five hours a day, calling it an "anachronistic" privilege.
Now, as Greece's new prime minister, the 51-year-old will need to show investors that the country's first post-bailout government can take more bold measures to structurally overhaul the economy and rid it of corruption, red tape and tax dodging. He'll also need to convince crisis-weary Greeks that he can lead the country into better times - all while facing many of the same constraints from creditors as his predecessor, Alexis Tsipras.
"If Mitsotakis does some of the things he has said will be done in the next 12 months, we will be on the right path," said Andrew Liveris, chairman of the Hellenic Initiative, a group founded in 2012 mostly by US-based Greeks to help shape the country's recovery.
Mr Mitsotakis, a Harvard and Stanford-educated former banker, who worked at Chase Bank and McKinsey and Co. in London before getting into politics, has promised lower taxes and incentives for investments.
He wants to immediately legislate some ambitious tax cuts that he hopes will boost investment and relieve austerity-weary Greeks. A raft of cuts in levies is planned, including a corporate tax rate of 20 per cent by 2021 from 28 per cent now.
Levies on dividends will be slashed by half in 2020, while the capital gains tax on property and sales tax for construction will be suspended for three years.
Mr Mitsotakis inherited an economy on the mend and a stock market that's soaring - the Athens Stock Exchange General Index has advanced more than 42 per cent this year.
But investors want to see if he follows through on promises and if the measures actually stick, George P. Stamas, the president of the Hellenic Initiative, said. "They will wait to see during the first 100 days what the legislative actions will be and whether Greeks will take to the streets again."
Among his top priorities is reviving stalled projects, starting with Hellinikon, which is valued at 8 billion euros and expected to generate more than 75,000 jobs.
The government has promised to stick to its commitment to deliver primary surpluses of 3.5 per cent of gross domestic product for this year and 2020. It's in talks with creditors since the tax measures could slash its receipts and may affect Greece's pledge to do that until 2022.
Mr Mitsotakis is banking on the tax cuts to spur investments and growth. Greece's foreign direct investment was 3.6 billion euros in 2018, the most since 2006. Investments could target high-end tourism, renewable energy and agricultural products like wine and olive oil. BLOOMBERG