While the legislation’s aim is to include cryptocurrencies in the country’s tax code, taxation of cryptocurrencies among European countries varies from 8% in Cyprus to 30% in France. However, in all the places, these taxes come under the “capital gains” category.

As per Reuters, the Greek government wants to make the first 500 euros (USD 580) of gains tax-free. The tax will not apply to individual cryptocurrency mining, but ⁠the clause of exception will come into force if the entity mining is registered as a corporation.

As per an analysis from the Crypto Briefing, a 15% flat tax will be imposed on profits from crypto asset disposals. This will apply to individuals, with the 500-euro annual exemption likely giving smaller investors some breathing room.

Losses incurred on crypto transactions could be used to offset gains within the same tax year. Crypto Briefing further anticipates the likelihood of the bill having provisions that will allow investors to carry forward losses for up to five years.

The European Union’s decision to roll out its Markets in Crypto-Assets (MiCA) framework has put tremendous pressure on individual member states in terms of formalizing their ways of handling digital asset taxation. Greece has been one of the laggards in this regard, operating without a cohesive crypto tax framework while other nations moved ahead with clear guidelines.

In fact, in Greece, there is no clarity on the legal status of cryptocurrencies to date. Still, being aware of the mass adoption and growing popularity of crypto assets among its residents, the administration has prevented itself from taking knee-jerk reactions like announcing investments in cryptocurrencies as “illegal.”

Within the context of Law 4514/2018 MiFID II, Law 4021/2011 EMD II, and Law 4537, PSD II, cryptocurrencies may be classified as financial instruments, electronic money, or funds if the relevant definitions conform with the transactions. However, there is no official guidance from the HCMC (Hellenic Capital Markets Commission) or the BoG (Bank of Greece) discerning the official classification of crypto assets.

The post Greece may impose 15% tax on crypto-related capital gains, says report appeared first on International Finance.

The signing of the tripartite agreement was witnessed via video conference by Egyptian Minister of Electricity and Renewable Energy Mahmoud Essmat and his Greek counterpart Thanos Papastavrou.

The deal was signed between the Egyptian Electricity Transmission Company (EETC), the Greek Independent Power Transmission Operator (IPTO), and Elika, a subsidiary of the Greek Copelouzos Group, which is implementing the project.

“There is a strategic direction to support and strengthen electricity interconnection projects and integration with the networks of neighbouring countries. The interconnection project with Greece is of great importance for achieving sustainable development and falls within a broader strategy for interconnection with the European electricity grid to make Egypt a regional energy exchange centre and a bridge for electricity transmission between the three continents,” Essmat told Daily News Egypt during the occasion.

According to Essmat, the Egyptian and Greek governments are eager to complete the project, which the Egyptian Minister described as an important gateway for the link between Egypt and Europe. He also emphasised the significance of electricity interconnection in supporting the energy mix, particularly renewables, which will bring economic benefits to the countries and parties involved.

The project is of strategic importance as a bridge for transmitting clean energy from Egypt to the European Union (EU), which has included it in its list of electricity interconnection projects funded by the regional bloc.

The pact comes weeks after the announcement of a sweeping plan by the Egyptian Ministry of Planning, Economic Development, and International Cooperation, under which the ministry will target large-scale investments and significant advancements in renewable energy for the 2025/2026 fiscal year. The plan has allocated EGP 136.3 billion (about USD 2.8 billion) to drive Egypt’s energy diversification, grid expansion, and regional leadership as a power hub.

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The trilateral conference between Egypt, Greece, and Cyprus in Cairo coincided with the release of this data. Greek Prime Minister Kyriakos Mitsotakis met with President Abdel Fattah Al-Sisi at the Egyptian-Greek-Cypriot Economic Forum on the fringes of the summit.

In particular, Egyptian exports to Greece decreased from USD 1.3 billion in the same time in 2023 to USD 1 billion in the first 11 months of 2024. On the other hand, Greek imports to Egypt were USD 530 million, a modest increase from USD 523 million in the first 11 months of 2023.

During this time, Egypt’s USD 610 million worth of exports to Greece included fuels, mineral oils, and distillation products. Fertilisers brought in USD 92 million, fruits and vegetables brought in USD 84 million, plastics and associated goods brought in USD 46 million, and iron and steel brought in USD 33 million.

At USD 274 million, fuels, mineral oils, and distillation products were Egypt’s main imports from Greece. Cotton brought in USD 120 million, fruits and nuts USD 44 million, tobacco USD 15 million, and electrical appliances and machinery USD 15 million.

In fiscal year 2023/2024, remittances from Egyptians employed in Greece totalled USD 15 million, up from USD 14.3 million in the prior fiscal year. In fiscal year 2023/2024, Greek employees in Egypt sent USD 3.4 million home, an increase from USD 2.7 million in fiscal year 2022/2023.

Greek investments in Egypt increased from USD 6.7 million in the previous fiscal year to USD 13.9 million in the 2023–2024 fiscal year. In the meantime, Egyptian investments in Greece increased from USD 700,000 in fiscal year 2022/2023 to USD 1 million in fiscal year 2023/2024.

In 2024, the population of Egypt was 107.2 million, whilst that of Greece was 10 million. By the end of 2023, there were estimated to be about 40,000 Egyptians living in Greece.

Relatedly, during the first 11 months of 2024, trade between Egypt and Cyprus totalled USD 217 million. During this time, Egyptian exports to Cyprus totalled USD 181 million, a substantial rise above the USD 96 million reported during the same period in 2023. In contrast, Egyptian imports from Cyprus increased from USD 12 million to USD 36 million during the same time in 2023.

Egypt’s top exports to Cyprus were plastics (USD 6 million), paper (USD 8 million), fertilisers (USD 43 million), and iron and steel (USD 92 million). Fuels and mineral oils accounted for USD 28 million of Egypt’s total imports from Cyprus, followed by machinery and electrical appliances at USD 4 million and pharmaceuticals at USD 1 million.

In fiscal year 2023/2024, remittances from Egyptians employed in Cyprus came to USD 14.4 million, up from USD 13.5 million in the year before. On the other hand, in fiscal year 2023/2024, Cypriot employees in Egypt sent USD 950,000, a minor decrease from USD 970,000 in the previous year.

In fiscal year 2023/2024, Cypriot investments in Egypt reached USD 114.6 million, a significant rise from USD 35.2 million in the year before. In fiscal year 2023/2024, Egyptian investments in Cyprus totalled USD 40 million, up from USD 17.3 million in fiscal year 2022/2023.

In 2024, the population of Egypt was 107.2 million, but that of Cyprus was 1.4 million. By the end of 2023, there were an estimated 4,000 Egyptians residing in Cyprus.

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This analysis explores the renewed interest in SCDIs, evaluates their benefits and challenges, and considers the broader implications of their use in debt restructuring, drawing on recent examples from countries like Ukraine, Sri Lanka, and Zambia.

What Are State Contingent Debt Instruments?

State Contingent Debt Instruments (SCDIs) are a type of bond that links debt repayment conditions to specific economic or fiscal metrics. Unlike conventional bonds that offer a fixed interest rate and principal repayment schedule, SCDIs offer flexibility by tying repayments to variables like GDP growth, revenue from natural resources, or other economic performance indicators. SCDIs aim to balance the risk and reward for both borrowers and investors, offering potential gains when a country outperforms and relief when it underperforms.

The resurgence of SCDIs comes at a time when numerous countries are struggling with unsustainable debt burdens, worsened by global economic pressures, political instability, and the impact of COVID-19. The recent cases of Zambia, Ukraine, and Sri Lanka demonstrate both the potential of these instruments and the challenges they present.

Flexibility And Alignment With Economic Performance

SCDIs offer several advantages that make them an appealing tool for managing sovereign debt. Their primary advantage lies in their ability to align debt repayment obligations with a country’s economic performance. When a country’s economic conditions are favourable, payments can increase, thus rewarding investors for their risk.

Conversely, in times of economic distress, payments decrease, reducing pressure on the borrower. This flexibility can make SCDIs particularly useful for countries facing uncertain economic futures.

For instance, Zambia’s restructuring process incorporated SCDIs linked to the country’s economic performance, specifically its debt-carrying capacity, exports, and fiscal revenues. According to Zambia’s Ministry of Finance, these instruments provided immediate repayment relief while creating a conducive environment for economic development. This approach allowed Zambia to allocate resources toward essential public goods and services while meeting its debt obligations.

Ukraine also leveraged SCDIs during its wartime debt rework in August 2023, integrating GDP-linked bonds that incentivised investors with potential payouts if the economy grew faster than anticipated.

By using these flexible instruments, Ukraine managed to swiftly re-engage with bondholders, effectively bridging the gap between market expectations and economic realities. However, it should be noted that wartime economic forecasts are inherently unpredictable, which brings significant risks for both investors and the issuing country.

Complexity And Investor Reluctance

While SCDIs can be powerful tools for speeding up debt restructurings and providing much-needed economic relief, they are not without their challenges. The complexity of these instruments often makes them difficult for both issuers and investors to navigate. Investors may be deterred by the complicated nature of SCDIs, which can lead to increased borrowing costs for the issuing country.

One major issue with SCDIs is the potential for investor reluctance, especially regarding pricing and trading on secondary markets. History provides several cautionary tales. Argentina’s use of GDP-linked warrants in 2005 led to significant legal disputes, as hedge funds accused Buenos Aires of manipulating economic data to minimise payouts.

Similarly, Ukraine faced billions of dollars in obligations for GDP warrants that lacked a cap on investor payouts, creating substantial fiscal challenges. According to a report from the Bank for International Settlements (BIS), contingent instruments issued by Argentina, Greece, and Ukraine carried a “high and persistent” premium, ranging between 4.24% to 12.5% above standard bond yields, highlighting the risks perceived by investors.

A History Of Mixed Success

The concept of SCDIs is not new. Latin American countries first used these instruments in the form of Brady bonds during the late 1980s to manage the regional debt crisis. Since then, various countries have experimented with SCDIs, with mixed success.

Argentina’s GDP-linked warrants and Greece’s 2012 debt restructuring both included contingent instruments. While these instruments provided a reprieve from crippling debt obligations, they also introduced new complications in the form of legal disputes and elevated borrowing costs.

The mixed success of these historical examples reveals the importance of sound design and clear criteria for contingent debt instruments. The experiences of Argentina and Greece underscore the risks of flawed structuring, which can lead to disputes, market distrust, and adverse economic outcomes.

This historical context provides crucial lessons for countries like Sri Lanka and Zambia, which are looking to utilise SCDIs more robustly and transparently.

Sri Lanka’s Experiment With Macro-Linked Bonds

Sri Lanka’s recent decision to incorporate macro-linked bonds into its debt restructuring strategy is noteworthy. These bonds link debt repayments to performance indicators such as GDP growth, which allows the country to adjust both principal and interest payments based on economic performance.

Such an approach provides the Sri Lankan government with “breathing space” during periods of economic stress. This approach is still evolving, and its long-term success will largely depend on how well Sri Lanka’s economic growth aligns with IMF forecasts and how transparent the process is.

However, concerns have already been raised regarding the stronger-than-expected growth forecasts released by the Sri Lankan government. Analysts have questioned whether these optimistic projections could lead to an overestimation of the country’s ability to meet its repayment obligations, potentially resulting in fiscal strain if economic growth does not materialise as predicted.

Role Of International Institutions And Market Benchmarks

International financial institutions play a pivotal role in the success of SCDIs. The Global Sovereign Debt Roundtable—which brings together representatives from borrowing countries, private lenders, the World Bank, and the G20—has highlighted the potential of SCDIs to address the rising number of sovereign debt defaults. By fostering dialogue between all stakeholders, the Roundtable aims to create a framework that can make these complex instruments more accessible and beneficial.

One of the significant challenges that new SCDIs must overcome is ensuring their eligibility for inclusion in major financial benchmarks like JPMorgan’s Emerging Market Bond Index (EMBI). Instruments that fail to qualify for these benchmarks may struggle to attract investor interest, thereby driving up borrowing costs.

Zambia’s recently issued SCDI, linked to its debt carrying capacity, exports, and fiscal revenues, aims to meet benchmark eligibility to keep borrowing costs manageable. By relying on IMF assessments instead of government statistics, Zambia hopes to mitigate some of the risks associated with data manipulation, as seen in previous examples like Argentina.

While SCDIs offer an enticing option for countries in distress, they are also a double-edged sword. The experiences of Argentina and Ukraine serve as cautionary tales, highlighting the risks of flawed design, legal disputes, and increased borrowing costs.

For SCDIs to truly be effective, they must be well-designed, transparent, and aligned with internationally recognised benchmarks. The role of international financial institutions in fostering a supportive framework for SCDIs cannot be overstated, as their involvement will be critical in ensuring that these instruments serve both issuers and investors effectively.

As more countries turn to SCDIs to navigate their debt challenges, it will be crucial to learn from past experiences and refine the structure of these instruments. If successful, Sri Lanka’s experiment with macro-linked bonds could set a new standard for how countries approach sovereign debt restructuring in the 21st century. The future of SCDIs hinges on finding the right balance between risk and reward, ensuring that they provide the necessary relief to borrowers while maintaining the confidence of investors.

The post IF Insights: The renaissance of state contingent debt instruments appeared first on International Finance.

The Golden Visa programmes have led to the heating up of the real estate markets in the South European countries where it is the most popular – Portugal, Spain, and Greece. The question now is does residential real estate in these countries hold value for international investors?

Qualifying for a Golden Visa in Portugal, Spain and Greece

Launched in 2012 by the Portuguese government, Portugal’s Golden Visa programme has helped attract investments of around €5 billion into the Portuguese economy. The Portuguese Golden Visa is available to anybody who is not a citizen of Portugal or belongs to a European Union member country. To qualify, one must make an initial investment of €500,000 in real estate and maintain it for a minimum period of five years. The investor also needs to spend a minimum of seven days in Portugal each year during the period. Investors can also become eligible for a Golden Visa by investing in refurbished older properties in certain locations for $350000.

In Spain, a minimum investment of €500,000 in Spanish real estate would make one eligible for the golden visa. This would earn the investor a one-year residential permit. However, contrary to Portugal, an investor is not required to spend any number of days in the country as compared to Portugal. He can apply for permanent citizenship after completion of five years.

Paul Williams, chief executive at La Vida Golden Visas, believes the Spanish Golden Visa programme offers investors less value than other European programmes on the market. It also has far less government support in promotion of the programme and has  apparently minimal direct economic benefit, in his opinion.

Greece, on the other hand, provides the lowest investment level of any citizenship by investment programmes in Europe. An investment of just €250,000 would make one eligible for a Golden Visa in Greece. The investor can choose to invest either in residential or commercial properties. He can invest in multiple properties or acquire one with joint ownership. Successful applicants and their families are able to benefit from visa-free access to Europe’s Schengen Area within two months of applying.One can apply for citizenship and a passport after the completion of seven years. After acquiring permanent citizenship, they are free to dispose off their investment as further visa renewals are not necessary.

Prices surge in Portugal and Greece; slow growth in Spain

Despite an economic slowdown, property prices in Portugal are on the rise. In the third quarter of 2019, property prices in Portugal increased by 7.92 percent year-on-year. According to reports, Portugal has become the Eurozone’s hottest property market ahead of Spain, seven years after introducing the Golden Visa programme.

Interestingly, even although Portugal is a hot real estate investment destination, home prices in Portuguese cities remain low. Home prices in Lisbon are among the lowest when compared to other Western European capitals such as Paris, London, Amsterdam, and Madrid. Besides Lisbon, housing prices in other Portuguese regions such as Porto, Amadora, and Seixel have also increased significantly. While Porto witnessed a 15.6 percent increase in 2018, Amadora and Seixel recorded growth of 14 percent.The 2008 financial crisis hit Spain hard.

So bad was the impact that housing prices in Spain declined for eight consecutive years. Only in the first quarter of 2016, did housing prices witnesse a growth in Spain. However, the market is changing and changing for the good. In Spain, housing prices grew by 5.3 percent in June 2019 year-on-year. However, the growth of housing prices in Spanish cities such as Madrid, Barcelona, Burgos, Valladolid, Malaga, Zaragoza, Valencia, Tarragona, and Palma de Mallorca has slowed down.

Greece too, was hit hard by the financial crisis. Between the crisis of 2008 and 2017, Greece’s property prices fell by 42 percent. But like Portugal and Spain, the country’s real estate has recovered from the crisis. Residential property prices in Greece increased by 7.7 percent in the second quarter year-on-year. It also happened to be the sharpest growth witnessed by the sector in more than a decade. The uptrend was witnessed in all the market segments throughout Greece. In Athens, property prices have increased by 11.1 percent year-on-year; mainly due to the Golden Visa programme.

Positive outlook for south Europe’s real estate market

For the prospective global real estate investor, the Portuguese real estate market might still be of good value because prices are comparatively low compared to other destinations in Europe. Luiz Felipe Maia, an international property specialist with a focus on European and the Brazilian market, and the founder of Maia International, told International Finance that he believes that there are a small percentage of investors that do not intend to live in the country, and this could have an impact on the properties that cost between 500,000 to $600,000. According to him, the non-habitual residence NHR programme that has been very popular will be able to fill a part of this market. The NHR has considerable tax benefits and to be part of this programme you must stay for at least 183 days per year in Portugal. This programme does not require its holders to purchase a property but they still need a place to live in, which has an impact on the rentals and sales market.

Even though Portugal is set to review the Golden Visa Programme, it is expected to have a limited impact on the real estate market. Kate-Everett-Allen, the head of International Residential Research at Knight Frank pointed out that there were some 7,498 properties purchased through the initiative according to government data since 2012 while 761,000 residential properties were sold nationwide during this period.

The outlook for Spain’s real estate investment is upbeat, with sales expected to increase from about 500,000 units last year to between 625,000 and 650,000 in 2019. In fact, real estate transactions are at the highest level since 2008. Sebastian Nieblas, chief executive at Amrein Fischer, a real estate agency based in Spain told International Finance, “The Spanish economy grew by about 2.6 percent in 2018, after growth rates of 3 percent in 2017, 3.2 percent in 2016, 3.6 and percent in 2015, The European Commission expects Spain’s economy to expand by 2.2 percent this year and by another 2 percent in 2020. Foreigners have a right to buy and resell all kinds of property – residential, commercial or land, with no limits.

All indicators show and positive and stable economic growth at least until 2023 and property value is increasing year by year, which gives investors a very positive picture. Greece too is emerging as a rising destination for the acquisition of second homes by international buyers. The number of real estate investors investing in Greece is expected to increase in the next five to 10 years.

According to Natalie Leontaraki, who holds the post of Managing Director at Engel & Völkers, the agency’s decision to expand in Greece is based on this sole factor. She told International Finance that Greece recorded the highest number of visitors globally in 2018 and the country is set to break its own record this year.

Top investment destinations in Portugal, Spain, and Greece

A major portion of the real estate investment coming into Portugal through the Golden Visa goes to Lisbon and Porto. However, cities like Braga and the outskirts of Lisbon have very attractive industrial and commercial real estate assets. Algarve, which is known for its Atlantic beaches and golf resorts, is one of the most popular holiday destinations in the country.

The region too, has seen substantial investment in recent years through the Golden Visa programme.

While the Golden Visa programme in Portugal has attracted many Chinese homebuyers, according to Luiz Felipe Maia, people from Brazil, Turkey, South Africa, Russia, and Hong Kong have been leading the enquiries for the last three months. He believes Brexit could attract many UK nationals as well.

Spain, with the Mediterranean Sea, sun and beaches, attract a lot of second homebuyers. While Madrid and Barcelona have always been the top investment destination for investors, Valencia and Málaga have also become very interesting options in the last three years.

Sebastian Nieblas highlighted the Costa del Sol, also called de European Florida, has also become a hot spot with cities such as Marbella, Estepona, Benalmadena, Torremolinos, and Fuengirola also attracting a lot of second homebuyers through the Golden Visa programme.

Chinese buyers dominate in Spain too, when it comes to the number of second homebuyers, accounting for almost 70 percent of the total visas issued. Second to China is Russia, however, the number of investors from Russia has been decreasing since the last two years. Interestingly, in 2015, Russia was the leading country when it came to Golden Visa investors. On third position is the US, followed by Venezuela and Iran in fourth and fifth.

Paul Williams told International Finance that while Spain attracts investors from all across the world, many inquiries come in from the Middle East and Latin American countries.

Demand for properties in Greece has soared 25 percent this year compared to 2018. Besides Athen, properties in regions such as Santorini, in Glyfada and in Mykonos attract a lot of real estate investors from the US.

The Athenian Riviera- coastal area in the southern suburbs of Athens attracts affluent, international clientele, as some of the most luxurious properties in Greece are found along this coast. Areas such as Acropolis, Koukali, and Metz are also in high demand.

Rental yields in Portugal, Spain and Greece

Rental yields in Lisbon, Portugal range from around 4.5 percent to 6.7 percent, and smaller apartments fall on the higher end of the yield range. Apartments in smaller cities like Cascais and Oeiras can expect to yield about 6.7 percent and 6.15 percent, respectively. Letting out properties on the short-term rental market has become increasingly popular with property investors in recent years in Northern Portugal. It allows the tenor to enjoy higher rental yields and increased flexibility.

In Spain, the median rental income of popular expat areas gives a yield of 4.8 percent. Rental investments in Barcelona are achieving an average return of 5 percent; however, the Costa Daurada region, south of Barcelona, offers particularly high yields. The average is around 5.3 percent. Similarly, Tarragonès has a rental yield of 5.8 percent. Also, rental yields in cities like Madrid are the highest in Europe.

In Athens, rental yield stands at around 4.2 percent for apartments of 120 square metres. Surprisingly, the gross rental yield in the suburbs of Athens is also good.  In Glyfada, 50 square metre apartments can yield 6 percent, whereas, rental yield for a 120 square metre apartments can be around 4.7 percent.

Is there value in south European real estate?

The real estate sector in European countries such as Greece and Spain were hit hard by the financial crisis of 2008. But after the global financial crisis in 2008, banking and financial laws in these countries have been reinforced and changed, in order to guarantee that the banking system offers nowadays guarantees, stability, and safety to investors. Kate Everett-Allen told International Finance that average prices in Spain and Greece still sit 22 percent and 37 percent below their pre-financial crisis highs suggesting prices remain good value. In addition, these countries offer good climates, easy accessibility, low mortgage rates and for investors, strong tenant demand.When International Finance asked the question to Luiz Felipe, he responded by saying,” Definitely, not only for Asian investors but from all parts of the planet.”

He said, “It is important to understand that Portugal is a country in a process of rehabilitation and renovation of properties and not so much about new constructions. When comparing with Miami where you put a house down and then erect a building with 200 apartments. In these Portuguese cities, in 90 percent of the cases, the same old building with the same number of apartments will get rehabilitated or renovated with the same number of units, it had 200 years ago. We are not oversupplying the market.”

Natalie Leontaraki, believes the market in Greece has potential and provides get real estate opportunities to investors. She told International Finance that since the end of 2016, the number of real estate investors in Greece is increasing. She anticipates the market to keep increasing for the next seven years and then stabilising. High ROIs, high yields, a low Real Estate Transfer tax of 3 percent, an easy process to purchase real estate along with the correction of the market are all factors that someone should be paying close attention to.

In Spain, the crash of 2008 was driven by excessive lending which led to an effective bailout of the Spanish property market by the ECB with funds channeled to the SAREB. At the time up to one million homes were sitting on the books of the banks to be sold off at a fraction of the price. Currently in 2019, 11 years after the crash, Spain is still selling properties below their peak prices.

According to Paul Williams, what has changed over the years for international investors, in particular, is the perception that a real estate market can keep rising indefinitely. The same can be said for the lenders who believed this and who also have greater controls today. He said, “So provided we don’t forget the lessons of the past we should all be fine. History never repeats itself of course.”

Constanza Maya, Head of Operations and Expansions of Engel & Völkers in Spain, Portugal and Andorra told International Finance, “So the recommendation is to invest, either in residential homes in the centre of large cities such as Barcelona, Madrid, and Valencia, or in newly built offices and surfaces of more than 500 square metre in modern business centres, sometimes located in specific districts of the city, such as 22@ district in Barcelona.”

The post Is there value in south European real estate? appeared first on International Finance.

Al Muhairi, Mubadala Deputy Group CEO & Chief Executive Officer, Alternative Investments and Infrastructure, signed the MoU at a ceremony held in Abu Dhabi, UAE on March 28, 2018. Commenting on the MoU, Greece’s Deputy Prime Minister and Minister of Economy and Development Yannis Dragasakis, said: “The creation of a new co-investment platform represents an exciting partnership for both parties. Greece and the United Arab Emirates have had strong diplomatic ties for many decades and, in recent years, we have seen an increase in trade and bilateral investment between our countries. The signing of this MoU represents the first step towards wider cooperation between Mubadala and Taneo, and the creation of an investment platform that can facilitate the growth of resilient businesses in key areas of the Greek economy.”

His Excellency Khaldoon Khalifa Al Mubarak, Group Chief Executive Officer & Managing Director of Mubadala, added: “The Greek economy has demonstrated its resilience in recent years and many sectors are now demonstrating robust growth. As a global long-term strategic investor and partner, Mubadala’s focus is on finding opportunities across different markets which offer compelling investment prospects and the opportunity to generate strong and consistent returns.”

Established in 2001 by the Greek government, Taneo is a principal investment firm specializing in fund of funds investments. The firm invests in venture capital funds which specialize in startup, early, and expansion stage investments, in particular, Greek SMEs operating in telecommunications, IT, e-commerce, biotechnology, and new materials. To date, Taneo, which is now co-funded by the Greek government and institutional investors, has indirect investments in approximately 50 companies through over 10 venture capital funds.

Mubadala is active in 13 sectors and more than 30 countries around the world, prioritising its partnerships with best-in-class organisations. The company is currently developing global industrial champions in sectors such as aerospace, ICT, semiconductors, metals & mining and renewable energy, utilities and manages a diverse portfolio of financial holdings.

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The events in Spain, following the Catalan government’s decision to stage an illegitimate referendum on independence and the reaction by the national government, is a concern for both the European economy and the wider international community.

This vote also had a direct impact on the Euro, which fell by 0.6 per cent against the dollar to approximately $1.174, one of its lowest levels since mid-August. Market analysts, who predicted at this point that the referendum would likely start a new phase of political instability for the EU, have so far been proved right.
After making a small recovery, the Euro once again fell against the dollar when the Catalan regional assembly voted to leave Spain after the national government declared the referendum result null and void.

The events which followed, with the arrest of politicians and activists on charges of sedition and rebellion along with the self-imposed exile of Catalonia’s regional president Carles Puigdemont, have been more akin to the actions of a Third World dictatorship than a country which is a full-fledged member of the European Union. They are unlikely to help promote confidence in Spain within the international business community. Governments across the EU will now be hoping the snap election to be held in Catalonia on December 21 will restore stability to the region and the rest of Spain.

Another crisis in the background
The events in Spain have also served to put two other key issues, namely Greece and Italy, on the back-burner for now. Both countries have failed to meet fiscal reforms and austerity measures, all of which has real potential to trigger a serious economic crisis throughout the Euro-zone. Despite their predicament, both countries have managed to get funds, saving them from defaulting, but this situation is not viable in the longer run.

Italian banks are facing a crisis similar with around $400 billion in bad loans on their balance sheets. The country’s weak growth is making it difficult to address the problem. Meanwhile, Greece’s economy has never really recovered from its well-publicised debt crisis, which initially came to the fore in 2011 when European Union leaders agreed to a substantial bail-out package. Questions still linger as to whether Greece may still have to leave the single currency to free it from its current cycle of unmanageable debt.

Other worrying factors
All these factors as well as the right wing AfD’s surprisingly strong results in September’s German elections raise questions about the EU’s stability going forward. There is potential for it to impact on the value of the Euro, which would create wider global implications.

British manufacturing exports into the EU have recently soared on the back of a low pound, but a sustained fall in the Euro could threaten that. UK exports to Spain are relatively small, but the impact of business within bigger Euro-zone markets, like Germany and France, would be a huge concern.

The UK’s tourism sector, which had enjoyed a post-Brexit boost in 2016, is also at risk with a falling Euro. Last year, 25.3 million EU visitors came to the UK, up four per cent on 2015, a rise which was partly attributed to a strong single currency against the pound.

A fall in the Euro could, of course, help some British companies which currently buy goods and services in the EU or have employees based there.

Whether they stand to gain or lose from the developments across the EU, all British companies which export to or import from this market should be putting measures in place to minimise their exposure to potential foreign currency movements.

Implementing a robust and comprehensive risk-management strategy is now more essential than ever. Businesses need to look at how they can best conduct their transfers strategically to manage their exposure and secure profitability. The starting point is to clearly understand their level of exposure to currency movement and then to set out an appropriate budget rate and create a suitable hedging plan.
Using a combination of forward contracts, spot deals and orders according to such a strategy can provide certainty and protection, shielding their bottom line and maximising the funds they receive.

These developments across the EU, which earlier in the summer seemed to be confident and on the front foot economically, underline how quickly circumstances can change. While it is hoped that stability will soon be restored in Spain, businesses in the UK must ensure they are not exposed to these risks, which can significantly impact their profitability.

Daniel Stanley is an Option Trader at London-based foreign exchange specialists Global Reach Partners

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In the wider Greek debt crisis, 2017 now looks set to provide the necessary springboard for sustainable economic growth and renewed optimism.

The successful conclusion of Greece’s second bailout review on June 15 has ended months of uncertainty.It has paved the way for the International Monetary Fund (IMF) to re-join the country’s bailout programme via a maximum $2bn standby agreement, and prepared the required framework for debt relief that may be finalised within a year.

The agreement ends the stand-off between the IMF and the European Union, and provides for the disbursement of €8.5bn. It should be considered a key step in rebalancing the economy on a sounder footing and offering additional clarity on necessary debt relief.

The first disbursement of €7.7bn will take place in early July, of which €6.9bn will go towards debt servicing and €0.8bn to state arrears, while another €0.8bn will be disbursed for arrears clearance after the summer. Payment of state arrears will have a positive effect on the economy, whilst Greece’s liquidity needs remain relatively small until mid-2019.

Why was Greece lost in the labyrinth?

Whilst the eschatology of Greece may have shifted focus from death to resurrection, the post-mortem examination bears many contradictions. Contrary to popular belief:

• Greeks are by far the hardest working people in Europe and ranked fourth globally
• Greeks worked on average 2,042 hours a year, more than the average worker in both the UK (1,674 hours) and Germany (1,371 hours).
• Greece also ranked fifth out of 148 countries for availability of scientists and engineers

However, despite this work ethic and evident quality of human capital, Greek workers produced less than half of the economic output of their American counterparts, and just over half of their German partners.

Source: OECD data (2015)

Such failure to realise potential, and proximity to ending it all together, are underpinned in the country’s bureaucracy, lack of innovation and ease of doing business. Successive governments during the crisis have sought to remedy such problems via unprecedented fiscal consolidation and reforms. The latter, being truly structural rather than cosmetic,arguably form a singularity in Greece’s economic progress,enabling its rich human capital to compete with its European partners and attract foreign investment.

Key indicators are starting to improve

Whilst progress has been far from linear, the economy appears to be slowly exiting the labyrinth of economic depression,as statistics have begun to prove.

Exports have more than doubled since 2008. Tourist numbers continue to break annual records,with more than 30mn expected this year, nearly three times the local population. In addition, interest from foreign investors in tourism and real estate has ballooned.

At the same time, the massive fiscal adjustment has started bearing fruit by closing a competitiveness gap which has been entrenched for decades. Unemployment levels dropped to a five-year low in March 2017 whilst the primary surplus rose to 4.2% of GDP versus a target for 0.5%. This rapid adjustment is most evident in the current account balance, which stands at -0.6% of GDP versus -15.1% just before the crisis in 2008.

Most importantly, the Greek economy returned to growth in the first quarter of the year, with output growing by 0.4% compared to the initial 0.1% contraction provided in flash estimates. This economic expansion was driven by consumption and notably, fixed capital formation, which has dropped to record low levels (circa 11% of GDP versus a 21.5%average over the last 67 years).

This realignment of the Greek economy is increasingly supported by the Greek diaspora, which has begun returning to the country in the form of capital rather than in person. It is marked by the deployment of signific ant-investment in a large number of sectors from financial institutions to food, hospitality and real estate.

In order to fuel both the government coffers and investors’ interest, the Greek government is now proceeding quickly with large-scale privatisation. Recently, these have attracted strong investment interest from European, US and Asian investors, which at times is characterised by fierce competition for the same assets that failed to attract a single investor just a few years ago.

According to the Foundation for Economic and Industrial Research, the large-scale privatisation is expected to add some 4% to the GDP and reduce unemployment by 2.5%. These include the privatisation of 14 regional airports, the development of the former Hellenikon airport and the privatisation of Piraeus port.

The design of a virtuous circle at a government level is ambitious but simple – offer privatisations at attractive levels to investors linked to necessary capital expenditure outlay, encourage capital to flow back into the country, create thousands of new jobs, boost economic activity and thereby attract further investment at healthier levels.

Nearly there, but still a long way to go

However, the circle remains incomplete due to the lack of a strong banking sector.

In this context, during the last two years, the Greek government,under the auspices of the European Central Bank and Single Regulatory Mechanism, has proceeded quickly in adopting legislation for Greek banks to tackle the €100bn non-performing exposure issue.

To this end, the Single Supervisory Mechanism (SSM) has established aggressive targets to reduce NPEs by circa 40% by the end of 2019. Work-out legislation, which has now been adopted, forms the necessary framework to tackle this burden. It is intended that lower NPEs will translate to healthier bank balance sheets, renewed depositor confidence and credit expansion,which will fuel investments in the country and increase disposable income.

Considered within this wider context, the importance of the conclusion of the second bailout review must not be understated. By removing near-term risks related to repayments to creditors in July, the stage is now set for a discussion on the debt relief agreement after the elections in Germany,and subsequently Greece’s inclusion in the ECB’s quantitative easing programme.

Recent comments from European Commissioner for Financial Affairs, Pierre Moscovici, that Greece has met EU conditions to satisfy the suspension of excessive deficit procedures (fiscal deficit has fallen below 3% target) also set a positive tone.

Whilst many corners still obstruct line of sight, now is the time for investors to start looking seriously at Greece again, as the country edges ever closer to the labyrinth’s exit.

Petros Mylonas is Head of Southern Europe at LXM Group

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Days after a December 5 eurozone agreement to approve some debt relief, Tsipras announced a Christmas bonus for some 1.6 million low-income pensioners and committed to restore a lower sales tax rate for Aegean Sea islanders. The move surprised the eurozone creditors, who suspended the debt relief.

Tsipras said at an EU summit that there is room for ‘a breakthrough, without blackmail’. He will be making his case on his country’s debt problems when he calls on German Chancellor Angela Merkel in Berlin.

He expressed confidence the dispute with European bailout lenders will be resolved soon.

“I, as you can see, am extremely calm, and think it is something that will be overcome very soon. The (Christmas bonus) does not in any way threaten the bailout program and the targets for the 2016 budget surplus,” Tsipras said, adding that bailout creditors are preparing a report on the issue.

He said Germany is the only European country to question the bonus.

“It is unacceptable for some to try to revive a negotiating game to the detriment of Greece and its people, which has made huge sacrifices in the name of Europe,” Tsipras said. “This is not reasonable.”

He also accused the IMF of pressing Greece to adopt new austerity measures after the end of the program. “No democratic parliament … could accept such a demand and decide on measures to be implemented, if needed, after three years,” he said.

EU Parliament President Martin Schulz, another socialist, came to Tsipras’ defense, although he acknowledged that strictly speaking, the Greek government’s decisions have not complied with what was agreed to.

The post Tsipras confident of winning dispute with European creditors appeared first on International Finance.

IFM Correspondent

November 8, 2016: The Greek economy is recovering and stabilising after emerging from a six-year crisis. It is a crucial time for Greece and the world is closely watching every move.

At the EU-Arab World Summit held in Greece in early November, Prime Minister Alexis Tsipras accentuated the role of Greece as a pillar of peace, stability and security in the region. He pointed out that Greece is “a country with strong historical, cultural, economic and diplomatic ties with the Arab world (and) has been the port and bridge between Europe and the Middle East.”

The summit drew government representatives from the EU and several Arab countries, 15 investment funds, and more than 40 companies and financial institutions of the Arab world.

Mr Tsipras pointed out that Greece is strategically located and also noted the historical bonds linking Greece with the Arab world. Greece is ‘a country that systematically promotes, within the European Union and NATO, cooperation with Arab countries’.

He went on to explain how Greece is creating an environment that is ideal for investment by protecting investor interest of Arab participants in various sectors, as well as introducing pro-growth and business friendly reports. A new investment law has been introduced for this purpose, which will stabilise taxes and create smoother processes for permits.

“Greece is returning to growth,” Mr. Tsipras said.

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