Greece beats primary surplus target for 2016

The eurozone says Greece can deliver a primary surplus of 3.5 percent of GDP in 2018 but the IMF has said only 1.5 percent is feasible | © AFP/File | Aris MESSINIS

by John HADOULIS
Athens (AFP) | 21 April 2017 9:53

Under the bailout, Greece needed to clock a primary surplus — or budget surplus before debt repayments — of 0.5 percent of output in 2016, followed by 1.75 percent this year and 3.5 percent in 2018.

The announcement came as Greek officials aim to reach agreement on reform goals with the creditors in talks resuming next week.

Also Friday, the International Monetary Fund convenes in Washington for its spring meeting where Greek officials hope to secure fresh pledges on debt relief support.

In its announcement, the Greek statistics agency said the debt stood at nearly 315 billion euros ($338 billion) or 179 percent of output, up from 177.4 percent in 2015.

Eurozone nations including Germany want the IMF to retain a central role in supervising Greek reforms, but the global lender says it will only do so if it is satisfied that estimates of Greek recovery are not over-optimistic.

The eurozone says Greece can deliver a primary surplus of 3.5 percent of GDP in 2018 but the IMF has said only 1.5 percent is feasible.

In an article in the Wall Street Journal on Friday, leftist Prime Minister Alexis Tsipras said the EU-IMF squabble was holding back Greek recovery.

– Temporary factors? –

“We have committed to fulfilling the obligations undertaken to our creditors despite the political cost,” Tsipras said.

“But the safest way to ensure this is by boosting growth and ending the punishing policies of the past,” he said.

In a report on Wednesday, the IMF estimated the Greek 2016 primary surplus at 3.3 percent, noting that it did not have final figures for a definitive result.

IMF fiscal affairs department director Vitor Gaspar acknowledged that the figure was “significantly stronger” than the agency’s prior forecast, but attributed it to “temporary factors.”

Critics note that the government secured the result partly by holding back over three billion euros owed to state providers.

In Athens, the government noted that just a few months earlier the IMF had predicted a primary surplus of 0.1 percent for 2016.

The IMF has consistently argued that Greece will need significant cuts to be able to reach a primary surplus of 3.5 percent in 2018.

“The IMF sees a primary surplus of 1.5 percent as an appropriate level to be sustained over the medium to long run,” Gaspar had told reporters on Wednesday.

But the Greek government insisted that based on the performance of the economy, which it says the Washington-based lender has consistently failed to gauge accurately, there will be no need for additional measures in 2018.

A compromise is required to sign off on a second review of the bailout programme and unblock a tranche of loans Greece needs for debt repayments of seven billion euros this summer.

The review is expected to resume next week.

© 2017 AFP

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