Wildfires, heatwaves pose growing fiscal risk to Greece, PM adviser says

By Johann M Cherian

Aug 12 (Reuters) - ‌Wildfires and heatwaves ​pose ​a growing medium- and long-term fiscal risk for Greece and the wider region, a senior adviser to Prime Minister Kyriakos Mitsotakis said, ‌as the government boosts investment to shore up its tourism-dependent economy.

Michael ⁠Arghyrou, the prime minister's chief economic adviser, said Athens was pursuing investments in water and energy ‌infrastructure in tourism hotspots while examining ‌measures to improve insurance coverage against climate-related losses.

• "These events are becoming a more significant and, in many respects, more frequent and severe risk phenomenon," Arghyrou ​told Reuters. "This is a medium, long-term fiscal risk, not just for Greece, but the whole of the Mediterranean area."

• To address those risks, the government ⁠is pursuing an investment strategy aimed at strengthening water and energy infrastructure in tourism hotspots from Mykonos to ​Santorini, while also seeking to attract private capital, Arghyrou told Reuters.

• The strategy also targets Epirus, the North Aegean islands, Thessaloniki, Crete, ​Rhodes and the Peloponnese, where the release ‌of Christopher Nolan's film "The Odyssey" has fueled growing tourist interest.

• Hotter summers are extending the tourism season, drawing visitors from as ⁠early as April through October and November, a trend Arghyrou said was helping support tourism revenues.

• Arghyrou declined to say how much public funding would be allocated to the strategy, ⁠but said additional investment would be financed largely through higher tax revenues generated by a crackdown ​on Greece's informal economy.

• Greece has no plans to issue catastrophe bonds, which provide funding after major disasters, though Arghyrou said the idea merited consideration.

• The government is exploring incentives ‌to boost insurance coverage among households and businesses while encouraging insurers to offer affordable policies.

• Prime Minister Mitsotakis is expected to ‌unveil tax incentives for businesses, workers and the self-employed next month ahead of a ⁠general election next year. Arghyrou said ‌the measures would not ​come at the expense of fiscal discipline.

(Reporting by Johann M Cherian in Bengaluru, additional reporting by Renee Maltezou in Athens; Editing by ‌Karin Strohecker)

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