ATHENS • Greece's new Prime Minister Kyriakos Mitsotakis was sworn in yesterday, a day after an election victory that put him in charge of the European Union's most indebted member with vows to end a decade of economic crisis.
The challenge facing the 51-year-old Harvard graduate and former McKinsey consultant is a hefty one as he takes over from defeated leftwing leader Alexis Tsipras, who imposed the austerity measures required under a bailout to keep Greece in the euro zone.
The country's public debt last year stood at €335 billion (S$511 billion), or 180 per cent of GDP.
The debt load is forecast to fall to 168 per cent of GDP this year, but only under the belt-tightening brought in under Mr Tsipras' Syriza party - something that Mr Mitsotakis' centre-right New Democracy party says is stifling growth.
The tricky job of keeping Greece's international creditors onside while easing the hardship on Greeks - by lowering taxes and renegotiating fiscal targets - could result in a short honeymoon phase for Mr Mitsotakis.
He has pledged to create jobs and get rid of obstacles to business. Those pledges wooed Greek voters, who handed him 40 per cent of the votes in Sunday's election, ahead of the 31.5 per cent for Mr Tsipras.
"It's a strong message for change in Greece," Mr Mitsotakis declared.
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Three immediate tasks confront new regime
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Investors expect new Greek Prime Minister Kyriakos Mitsotakis to prove that his business-friendly reputation is deserved.
The former banker and management consultant will need to make good on pledges to address issues including government finances, soured loans and crippling bureaucracy, while working within tight fiscal constraints.
Although he has inherited an economy on the mend and a stock market that is soaring, they are rebounding from shrunken bases.
Mr Mitsotakis must ensure that Greece can attract the investment it desperately needs and create jobs as the country digs itself out of a financial crisis that has lasted more than a decade and taken a toll on living standards.
Here are the three main issues the new Greek government will have to deal with from day one:
1. FISCAL STABILITY
While the new government is not yet in place, the country's creditors want to send a clear message that it has to stick to its commitment of achieving a 3.5 per cent primary surplus every year until 2022.
Former prime minister Alexis Tsipras' move to distribute handouts before the European elections has raised doubts about Greece's ability to meet its fiscal targets.
The European Commission estimates that the freebies will lead to a fiscal cost of 1 per cent of gross domestic product for both this year and the next, meaning creditors may ask the new government for additional austerity measures.
Mr Mitsotakis plans to rapidly legislate tax cuts that will come into effect from next year to spur economic activity and show investors that Greece is creating a more friendly business environment.
2. BAD LOANS
The biggest challenge is addressing about €80 billion (S$122 billion) in bad loans. Lenders are speeding up efforts to cut soured debt by selling portfolios of non-performing exposures (NPEs), but they will need more tools to meet their ambitious targets of single-digit NPE ratios by 2021.
3. INVESTMENTS
Mr Mitsotakis' target is doubling Greece's growth rate to 4 per cent next year. To achieve that, he needs investments. To convince investors that they can trust the country again, he wants to immediately proceed with the long-delayed Hellinikon project.
The flagship venture envisages the transformation of the former Athens airport site - more than two times the size of New York's Central Park - into a metropolitan park including luxury hotels, casino, marinas and apartments.
But that will not be enough. The new government will have to deal with red tape, a sluggish judicial system and corruption, as well as speeding up privatisations, especially in the energy sector.
BLOOMBERG
Last week, he said that he saw it as his mission "to make sure we restart the economy" with "ambitious growth driven by private investments, exports and innovation". He predicted that he could persuade Greece's creditors to accept the easing of tight fiscal targets if "a comprehensive reforms package" was presented.
Mr Tsipras had warned that Mr Mitsotakis would do away with the social spending he brought in to help Greece's vulnerable groups.
He portrayed the Mitsotakis family - one of Greece's leading political dynasties - as part of a failed system that bankrupted the country in 2010, creating the need for the humiliating bailout.
The new Greek leader is the son of former prime minister Constantine Mitsotakis, one of the country's longest-serving parliamentarians. His sister, Ms Dora Bakoyannis, is a former minister and Athens' first female mayor.
Mr Mitsotakis took charge of the New Democrats three years ago. Following the election, his party will have a majority of 158 seats in the 300-member Parliament.
New Democracy was last in power in 2014, in coalition with the Greek socialists.
Syriza's parliamentary presence will shrink from 144 seats to 86. Mr Tsipras has promised to remain an "active" voice in opposition.
Sunday's election was Greece's third in as many months. In May, New Democracy beat Syriza by nearly 9.5 points in European Parliament polls. A week later, it completed a near-sweep of Greek regions in local elections. After that, Mr Tsipras was forced to call an early general election.
"A painful cycle has closed," Mr Mitsotakis said in a televised address following his victory, adding that Greece would "proudly raise its head again" on his watch.
AGENCE FRANCE-PRESSE
