High targets are damaging

The decision by eurozone finance ministers yesterday to agree to measures proposed by the European Stability Mechanism granting Greece short-term debt relief is important, but there is something decidedly irrational about maintaining such high primary surplus targets. They could perhaps be associated with the implementation of major and obvious reforms. But keeping them at the current levels merely because this is what the prevailing “religion” dictates is hurting the real economy and doing little to quell the voices of extreme populism. Instead of helping the economy get back on track, such lofty benchmarks will render further reforms that much harder to pass.