For the challenges, Greece warns Fitch, despite the BB – News

Unchanged at BB – Fitch badessed the solvency of Greece, estimating that in 2019, it would be a year of recovery for the economy but also a warning about the possible risks over time.

Fitch badysts warn that the current tax mix, "largely based" on lowering taxes and spending, is not sustainable beyond 2020. One of the biggest challenges of the next few years will be so to reform the policy without losing objectives.

In this context, the company believes that the reduction of the tax-free limit in 2020 will be implemented, noting that this will increase the tax base, which will give Athens a margin of maneuver to reduce rate.

Labor market developments that have come into effect following the conclusion of the memorandum, such as the resumption of collective bargaining with sectoral development and an 11% increase in wages, are another possible source of risk.

Fitch notes that it is premature to calculate the total impact of the changes, but warns that it can not be excluded that the country's competitiveness will suffer, which would have serious negative consequences. "The key factor" in the coming years, he adds, will be the attitude of the social partners in collective bargaining.

As the institutions have repeatedly pointed out, two other possible "mines" are the decisions of the Council of Ministers on retrospective and "red" loans, which continue to prevent new borrowing.

According to Mr. Fitch, the cancellation of court decisions can make it difficult to achieve primary surpluses of about 3.5% of GDP this year and 2020, surpluses that may not be fully achievable . The agency predicts that Greece will slightly lose its target of 0.1% in 2019 and 0.2 point in 2020.

With regard to non-performing loans, Fitch responds to the appeal launched by the IMF for better use of online real estate auctions and settlements amicably, combined with the sale of loans .

But it is clear that the liquidation rate of "red" loans will only accelerate if the state takes "concrete initiatives" to reduce them.

Source: skai.gr