Greek Parliamentary State Budget Office Warns of Bankruptcy Risk if Debt not Eased

    Greece is at risk of bankruptcy unless there is substantial debt relief, warns the Parliamentary State Budget Office, while calling for the need of tax policy change.

    In its quarterly report (July-September 2017), the House office claims that debt relief is absolutely necessary because interest payments after 2021 are alarmingly high.

    Overall, in the 2021-2026 six-year period, loan and interest payments amount to 84.3 billion euros, according to Public Debt Management Agency data.

    “Without substantial debt relief, Greece will go bankrupt!”, the report coordinated by Professor Panagiotis Liargovas, warns. The report also says that the obligation to achieve very high primary surpluses could strangle the economy, causing a vicious cycle of recession.

    Furthermore, in a section of the report called Taxation and Development in Greece it is noted that, “the tax policy applied in recent years – the tax burden increase – acts as an obstacle to the country’s economic growth. The continuation of existing tax policy brings the economy to a state of suffocation, while on a practical level, much of the tax is not collected.”

    The report also notes that the distribution of the tax burden is uneven, ie “on the one hand a large proportion of taxpayers pay a minimum tax – as evidenced by high rates of tax evasion and high poverty rates – and, on the other hand, high incomes are over-taxed, creating disincentives for work.”

    Finance minister disputes parliamentary office report

    “This is a miscalculation,” Finance Minister Euclid Tsakalotos told Efimerida ton Syntakton newspaper, in regards to the Parliamentary State Budget Office report.

    Tsakalotos disputed the figure for the amount of debt repayments Greece has to make in 2021-2026.

    The Parliamentary State Budget Office was led to erroneous calculations, based on data by the Public Debt Management Agency, that date from 2014.