During the election campaign, Mitsotakis campaigned tirelessly for a “strong absolute majority” to continue his reform course.
(Photo: Reuters)
Athens It should work on the second try. In the parliamentary elections on May 21, Kyriakos Mitsotakis and his conservative Nea Dimokratia (ND) narrowly missed out on an absolute majority of seats. Because it was not possible to form a government at the time, Greeks are to vote again on Sunday.
The 55-year-old Mitsotakis is the favorite in the voting. In the most recent polls, his ND, with around 40 percent, ranks far ahead of the radical left-wing alliance Syriza, which is the second strongest party at just under 20 percent.
This time, an electoral law is applied that rewards the strongest party with a bonus of up to 50 of the 300 seats in the distribution of seats. If the polls come true, the Conservatives could win around 160 seats in the next parliament.
Mitsotakis, who has ruled the country since July 2019, would then return to Villa Maximos, the seat of government on Athens’ Herodes Attikus Street, with a clear mandate from the electorate. Since the failed government formation in May, a top judge has served as interim prime minister.
During the election campaign, Mitsotakis campaigned tirelessly for a “strong absolute majority” to continue his reform course. In terms of economic and financial policy, Greece’s return to the league of debtors worthy of investment is right at the top of the agenda. The country lost this status when it plunged into the sovereign debt crisis in spring 2010.
Greece is currently the only country in the euro zone whose government bonds are still considered junk, i.e. not worth investing in. Analysts at JP Morgan expect three major rating agencies – Fitch, Standard & Poor’s and DBRS – to upgrade Greece to investment grade by the end of the year – provided Sunday’s election results in a stable parliamentary majority for Mitsotakis.
First term determined by exceptional circumstances
The financial markets have already largely anticipated the upgrade. 10-year Greek government bonds are in such demand that their yields are around 30 basis points below those of comparable Italian bonds, even though they are considered investment grade. The Athens stock index Athex Composite has gained almost 57 percent in the past twelve months, making it one of the top performers worldwide.
Since the failed formation of a government in May, a top judge has served as interim prime minister in the seat of government.
(Photo: imago images/ANE Edition)
The first term of office of the conservative prime minister was mainly determined by exceptional situations: pandemic, war in Ukraine, explosion in energy prices, inflation and escalating tensions with neighboring Turkey.
Nevertheless, the former crisis country has made great progress under Mitsotakis. In terms of economic growth, Greece has been in the top group of EU countries since 2021. Athens is again generating surpluses faster than expected in the primary budget, which excludes debt servicing.
>> Read here: The Greek government’s austerity program is paying off – A comment
No other member of the euro zone has reduced its debt ratio as much as Greece in the past two years. According to Eurostat, the rate fell from 206.3 percent of gross domestic product (GDP) in 2020 to 171.1 percent at the end of 2022. Mitsotakis has announced tax cuts, investment incentives and structural reforms in the judiciary, health system and education for the intended second term of office.
More: Athens Stock Exchange soaring: What factors are driving the stock market rally