Fis­cal tar­gets a pri­or­ity

Fi­nance Min­istry draft­ing study on lower post-2018 pri­mary sur­plus be­fore re­view

Kathimerini English - - Front Page -

The Fi­nance Min­istry is pre­par­ing a study it plans to show Greece’s lenders when rep­re­sen­ta­tives re­turn to Athens in Septem­ber for the start of the next bailout re­view that proves Greek fis­cal tar­gets can be low­ered with­out it lead­ing to any extra costs for eu­ro­zone mem­ber states.

Kathimerini un­der­stands that the re­port, which of­fi­cials hope to have ready by the end of Au­gust, will set out that it is pos­si­ble for Greece’s pri­mary sur­plus tar­gets to be lower than 3.5 per­cent of gross do­mes­tic prod­uct from 2018 on­wards, while main­tain­ing the coun­try’s fund­ing needs at be­low 15 per­cent of GDP each year. Athens is ex­pected to ar­gue that low­er­ing the tar­get to 2.5 per­cent of GDP will re­lease some 3 bil­lion eu­ros that the govern­ment could use for pub­lic in­vest­ment or re­duc­tion in taxes, which would help the econ­omy grow.

In a re­cent in­terview with Skai TV, Prime Min­is­ter Alexis Tsipras said “no econ­omy can sus­tain a 3.5 per­cent sur­plus” over an ex­tended pe­riod of time and sug­gested that he might try to per­suade the in­sti­tu­tions to re­duce the post2018 tar­get to be­tween 1.5 and 2 per­cent.

How­ever, Euro­pean Eco­nomic and Mon­e­tary Af­fairs Com­mis­sioner Pierre Moscovici warned dur­ing his visit to Athens last week that now is not the ap­pro­pri­ate time for the Greek govern­ment to be rais­ing the is­sue of fis­cal tar­gets. It is thought that US Trea­sury Sec­re­tary Ja­cob Lew made a sim­i­lar ob­ser­va­tion when he held talks with Tsipras and Fi­nance Min­is­ter Eu­clid Tsakalo­tos, also last week.

It seems that Athens ap­pre­ci­ates that it would not be wise to make a fuss over the mat­ter while the eu­ro­zone’s fo­cus is on the im­pact of Brexit and the prob­lems with the Ital­ian banks.

Kathimerini un­der­stands that Athens may be will­ing to of­fer bolder pub­lic sec­tor re­forms, such as a re­duc­tion of the so-called “spe­cial” wage cat­e­gories in the civil ser­vice and the pos­si­ble clo­sure of some agen­cies, in ex­change for con­ces­sions from its lenders on the pri­mary sur­plus tar­gets.

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