Μake us preferred on Google Wildfires and extreme heat are no longer just a summer hazard for Greece. According to Michael Arghyrou, chief economic adviser to Prime Minister Kyriakos Mitsotakis, they have become a structural risk to the country’s public finances, one that will shape government spending for years to come.
In an interview with Reuters, Arghyrou said the frequency and severity of these events is increasing across the Med, not just in Greece. He described the phenomenon as a medium to long term fiscal risk for the whole Mediterranean, not a one off cost tied to any single bad summer.
Infrastructure push targets tourism hotspots
The government’s response centers on upgrading water and energy infrastructure in areas that depend heavily on tourism. Arghyrou told Reuters the investment strategy spans islands including Mykonos and Santorini, along with Epirus in the northwest, the North Aegean, Thessaloniki, Crete, Rhodes and the Peloponnese.
Several of these regions, he noted, are also seeing a tourism bump tied to Christopher Nolan’s film “The Odyssey,” which has drawn international attention to lesser known parts of Greece. Athens is also looking to attract private capital alongside public spending to fund the upgrades.
A longer tourist season is helping offset some of the pressure. Arghyrou said hotter summers are pushing visitor numbers earlier into April and later into October and November, a shift that is supporting overall tourism revenue even as peak August heat becomes more disruptive.
Funding tied to crackdown on informal economy
Arghyrou would not put a figure on how much public money will go toward the infrastructure strategy. He said the added investment would largely be financed through higher tax revenue generated by a crackdown on Greece’s informal economy, a long standing goal of the Mitsotakis government.
On the question of catastrophe bonds, financial instruments that provide payouts after major disasters, Arghyrou said Greece has no current plans to issue them, though he added the idea is worth considering.
The government is also weighing incentives to get more households and businesses to buy insurance, while pushing insurers to offer more affordable coverage. Recent reporting by Reuters has pointed to a wider insurance gap across Europe as wildfire damage grows.
Tax incentives expected ahead of 2027 election
Separately, Arghyrou said Mitsotakis is expected to unveil tax incentives for businesses, workers and the self employed next month, ahead of a general election scheduled for next year. He said those measures would be designed to avoid undermining the government’s fiscal discipline.
For readers unfamiliar with Greek politics, Mitsotakis has led the center right New Democracy government since 2019 and has made fiscal stability, alongside tourism growth, a central pillar of his economic record heading into the next election cycle.
Source: Reuters
