Greece has made significant structural reforms in recent years and is continuing its reform agenda with several ongoing and planned measures, the OECD says in its analytical report (OECD Economic Survey) released this morning.

“Many reforms address key issues highlighted in this and previous reports on Greece,” adds the Organization, which noted that the Greek economy is strong and is projected to grow at a rate of 2.2% in 2025 and 2.5% in 2026. .

In its report yesterday, on the other hand, on the prospects of the world economy, the OECD stated that the structural reforms have brought benefits as Greece, together with Spain and Portugal, is among the few member countries of the Organization in which the potential per capita growth has been revised positively.

The international organization notes that the growth of the Greek economy and further progress in tackling tax evasion will boost public revenues and create fiscal space for priority measures, while increasing primary surpluses.

For the financial system notes that its resilience has improved significantly since 2007, with the credit rating of Greek banks having correspondingly improved in recent years. It mentions in particular the reduction, thanks to the Hercules plan, of the non-performing loan (NPL) ratio to 6.9% in June 2024 from a high of 49.1% in March 2017. The Hercules plan extended in 2024, “but additional measures could further improve loan restructuring and bankruptcy procedures as well as the management of NPLs that it is now under the control of management companies (servicers)’.

Bank profitability and capital ratios have also improved, although the latter remain below the OECD average. “However, long-term profitability and capital adequacy remain sources of concern,” according to the report, which highlights that the quality of banks’ regulatory capital remains low, weakening their ability to absorb losses as by June 2024 41% of capital of these related to deferred tax credits.

For the public debtthe OECD expects it to decline as a share of GDP, and its baseline scenario sees it fall to 90% in 2060, or to 75% if growth is stronger, for example if reforms to the national recovery and resilience plan are fully implemented.

Despite reductions in taxation in recent years, “the tax burden on labor remains highespecially in terms of social security contributions,” the report notes, adding that a further reduction could increase employment while reducing incentives for self-employment.

He suggests her reduction of the tax-free allowance of 10,000 euroswhich, as it states, corresponds to 61% of average annual wages and exempts half of Greek households from income tax. “This narrow base is one of the reasons that Greece has less income from personal income tax than other countries, although it has higher tax rates above the tax-free rate.”

For him VATthe OECD reports that there is significant room for improvement as the “compliance gap” (ie revenue loss) has narrowed but remains among the highest in the European Union. “Improved but still low compliance continues to limit revenue despite high rates.” In particular, it proposes the gradual abolition of exemptions from the standard rate of VAT in cases where there is no evidence that they reduce income inequality, citing for example the lower rates applicable to tourism.

The OECD recommends the tax cuts for low-wage earners with the reduction of insurance contributions, in parallel with the reduction of the tax-free.

It also suggests increasing the Excise Duty (Excise Tax) on cigarettes and imposing an Excise Duty on foods rich in fat, sugar and salt, which are harmful to health.

Other proposals made by the Agency include:

• Reforming unemployment benefits to link them to past earnings and increase their duration based on contribution history, while improving incentives to work

• Consolidation of the various support programs for low-income households and simplification of eligibility conditions

• The financing of new subsidies for electric vehicles with the increase of the VAT on diesel

• The rapid implementation of the one stop shop for investments in renewable energy sources and the review of procedures for environmental permits.