PM-in-waiting, Greek conservative leader wants to realise investment grade goal

By Renee Maltezou

SALAMINA, Greece (Reuters) – Greece’s conservative leader Kyriakos Mitsotakis hopes that victory in an election re-run on June 25 will open the way to finally achieve a goal he set when first elected four years ago: for Greece to regain coveted investment grade status.

Mitsotakis’s New Democracy party won a May 21 election with a 20-point lead over the leftist Syriza party that ruled Greece from 2015 to 2019, at the peak of a decade-long debt crisis.

But despite the large winning margin, a result Greece has not seen since the 1970s, New Democracy fell just short of the outright majority needed to rule without forming a coalition, prompting the second vote.

Mitsotakis, who was prime minister from 2019 until stepping down in favour of a caretaker premier following the inconclusive May vote as required by the constitution, says the result was nonetheless an approval of his policies. Opinion polls show New Democracy’s ratings slightly boosted ahead of the second vote.

“Our first goal, of course, is to obtain investment grade. I think this is something which is perfectly doable within the first months after the elections,” Mitsotakis told Reuters on a ferry to the island of Salamina, a working class area west of Athens, that gave him 47.7% in May.

Greek bonds lost the rating – which implies a very low risk of default – in 2010, a year after Greece’s debt crisis broke out, forcing it to sign up to three bailout programmes up to 2018.

Mitsotakis has said that only a stable government can implement necessary but unpopular reforms that will continue the country’s progress.

Under a new electoral system, the winner of the June 25 vote can receive up to 50 bonus seats for every point it wins beyond 25%, so if New Democracy broadly repeats its May performance it will likely secure a clear majority.

REFORM PATH

Mitsotakis, a former banker and the son of a former prime minister, faced criticism from his political opponents, Syriza and PASOK, who accused his administration of favouring oligarchs and the private sector and refusing to shed light on a wire-tapping scandal. They say it brought the state healthcare system “to the brink of collapse”.

Mitsotakis says reforming health is a top priority, if he wins a second term, along with speeding up judicial proceedings and setting up a “family ministry” to tackle the country’s falling birth rate that could threaten its pension system.

But above all he needs to accelerate growth to keep the country on a steady fiscal path. Greece sees growth at 2.3% this year, helped by tourism and investment.

His government spent about 40 billion euros in subsidies to help shield Greeks from the impact of the COVID-19 pandemic and high energy bills. It also reduced unemployment, increased the minimum wage and pensions and cut taxation to bring more foreign investment into the euro zone’s most indebted nation.

Mitsotakis says his administration has “laid the foundations for sustainable growth”. If re-elected, he says his cabinet, reinforced by more women, will follow the same path of reform, but also improve Greeks’ disposable income and reduce inequality.

“We want a different type of growth, a growth that focuses on our competitive advantages but also reduces inequality,” he said.

He believes Greece can achieve annually a primary surplus of 2% of GDP. Tackling tax evasion – seen at about a fifth of the economy – would also help Greece meet its targets and release funds for social policies, he said.

“We need to place more emphasis on this topic because it adds fiscal firepower to our budget,” he said.

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