By Eleni Chrepa and Sotiris Nikas
Sep 7, 2024 (Bloomberg) –Greek Prime Minister Kyriakos Mitsotakis announced measures aimed at addressing the negative impact of overtourism as visitors continue to arrive in record numbers in the post-pandemic era.
The government has been “very concerned” about an influx of cruise passengers during certain months of the year and will begin charging fees, Mitsotakis said Saturday during his annual speech at the Thessaloniki International Fair. It will also increase a tax related to the climate-crisis on accommodation.
Greece received a record 36.1 million visitors in 2023, while arrivals rose 16% to 11.6 million in the first half of 2024, according to the latest data from the Bank of Greece. The tourism sector contributes about 20% to the economy, making it vital to the health of the nation.
The country will also expand its so-called “Golden Visa” program to investors who are willing to put at least €250,000 ($277,000) into local startups. Foreigners were previously required to buy property to acquire the visa.
All passengers arriving at Greek ports will pay a fee, and the charge will be greater in the popular tourism islands of Santorini and Mykonos. A lodging tax for the April-to-October period also will be increased, with revenue benefiting local communities.
Mitsotakis reiterated concern that parts of Greece face the problem of “overtourism.” In an interview with Bloomberg in June, he announced plans to restrict cruise ships visiting the country’s most popular islands from 2025.
Short-term rentals have been blamed for fueling the country’s housing crisis, which along with high consumer prices has been at the center of recent political debate.
The government will ban any new short-term leasing for at least one year in three main parts of Athens, Mitsotakis said. Property owners who change leases from short-term to long-term won’t have to pay rental tax for three years, as will owners who decide to rent their homes instead of keeping them off the market, he said.
Holiday rentals increased an annual average of 28% from 2019 to 2023, while available short-term rentals doubled in the same period. Meanwhile, hotel accommodation rose just 3.5% in that period, according to data published in a Grant Thornton report for the country’s Chamber of Hotels released this week.
The government will also begin a new €2 billion program that will be used to reduce interest-rate costs for mortgage loans.
More Measures
Mitsotakis on Saturday also revealed a number of measures aimed at easing the cost of living, including a reduction in social insurance contributions by 1 percentage point in 2025 instead of a previous plan for a 0.5 point cut.
The premier also announced, among others:
- A 2.2%-to-2.5% increase in around 2 million pensions from Jan. 1.
- An increase in minimum wages beginning in April
- An increase in public sector wages, especially to doctors, firefighters and workers in the army and policy forces.
- Various tax reliefs to help the self-employed, farmers and others
- Changes to unemployment benefits
“I don’t have a sack of reckless spending today,” he said. “Our spending for 2025 is well balanced.”
Greece has already pledged to meet a budget primary surplus — an index that shows revenue minus spending excluding interest payments — of 2.1% of GDP for both 2024 and 2025, up from 1.9% in 2023.
Fiscal discipline is one of the most important criteria for financial markets, and the country’s recent prudent budget path was one of the drivers for ratings companies to return Greece to the investment grade zone in 2023 after 13 years at junk status.
“Healthy and rising primary surpluses, in tandem with sound nominal growth, will facilitate further significant reduction in the public debt-to-GDP, which is expected to fall to below 140% by 2027, from 161.9% in 2023,” DBRS Morningstar said Friday.
© 2024 Bloomberg L.P.
Unlock Exclusive Insights Today!
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.