EU pushes for preliminary deal on Greek bailout by April 7

Greece’s primary surplus in 2016 higher than forecast

BRUSSELS, March 25, (RTRS): The European Commission President JeanClaude Claude said on Friday eurozone lenders and Greece should reach a technical deal before a meeting of eurozone finance ministers on April 7.

In a statement responding to a letter by Greek Prime Minister Alexis Tsipras criticising International Monetary Fund (IMF) demands for labour reforms, Juncker declined to take a clear position on the contentious issue.

The IMF is pushing Greece to adopt such reforms as a condition to join an 86 billion euro ($93 billion) bailout programme, so far funded only by eurozone creditors.

In the letter, Tsipras had sought to link Greek support for a declaration marking the EU’s 60th birthday in Rome on Saturday to a recognition that the EU legal framework on social issues, known as acquis, also applied to Greece.

“For me, there is no doubt that the EU social acquis applies to Greece as to any other EU member state,” Juncker said.

Athens is at odds with requests from the IMF to change rules to make it easier to fire workers by weakening trade union bargaining powers. Greece says this would go against EU principles.

“There is no ‘one-size-fit-all’ in the social acquis or in the economic textbook when it comes to organising collective bargaining. Let me add that there is no place for ideology either,” Juncker said.

Meanwhile, eurozone lenders estimate Greece had a primary surplus between 2 and 3 percent of its gross domestic product last year, much higher than the target set under its bailout programme and more than previously forecast, an EU official told Reuters on Friday.

Better-than-expected figures could smooth bailout talks, which have stalled for months over fiscal targets and the pension and labour market reforms required by creditors in exchange for the disbursement of loans to pay debt due in July.

Under Greece’s 86 billion euro ($92.9 billion) bailout programme, the third since 2010, Athens was supposed to reach a primary surplus — the budget balance before debt-servicing costs — of 0.5 percent of GDP last year.

The EU official said the Greek authorities estimate now that last year’s primary surplus will be “around 3.5 percent of GDP”, although the final figures will be known only in April. This would be already in line with Greece’s target for 2018, when the programme ends.

“The Commission and the institutions are still assessing the data and have so far given a more cautious estimate of between 2 percent and 3 percent of GDP,” the official said, noting this would still be “a massive overachievement”.

In its last economic forecasts released in February, the European Commission had estimated a primary surplus for 2016 of 2 percent.

The size of the primary surplus is a source of contention between eurozone governments and the International Monetary Fund, which believes the surplus in 2016 was only 0.9 percent.

The EU executive, which together with the European Central Bank and the European Stability Mechanism represents eurozone lenders in Greek bailout talks, has also already said it saw Greece reaching its fiscal targets this year and in 2018, which are set respectively at 1.8 percent and 3.5 percent of GDP.

The IMF, which Germany wants to participate to the bailout programme to guarantee more discipline, has much lower projections.