REUTERS-Greece
outperformed its fiscal targets last year and should meet fiscal goals this
year, putting it on track for its primary surplus target in 2018, European
Commission Vice President Valdis Dombrovskis said.
Achieving a
budget surplus before debt servicing of 3.5 percent of economic output in 2018
is important because the euro zone may grant Athens further debt relief if
Greece attains and keeps this level for several years.
"Greece
has substantially outperformed on last year's fiscal targets, is going to meet
this year's targets and we need to finalize the work on outstanding measures in
2018," Dombrovskis told reporters before a meeting of euro zone finance
ministers.
"We see
that Greece is on track to reach its primary surplus target of 3.5 percent of
GDP in 2018 and we'll work out for further discussions on what is exactly the
fiscal trajectory after 2018 and what potential measures or contingency
mechanisms might be needed," he said.
Euro zone
finance ministers want Greece to keep the 3.5 percent surplus over the medium
term after 2018, but there is no agreement of what medium-term means, with
views ranging from three to 10 years.
Greece says
asking for any contingency measures to reach and keep the surplus at 3.5
percent is unjustified, because the set of reforms that lenders wanted from
Greece was agreed in 2015 and the country was delivering on them as promised.
To make
matters more complicated, the International Monetary Fund, which participated
in the euro zone's previous two bailouts for Athens, but is so far only an
observer in the current third one, says that forcing Greece to keep such a
surplus for years is an invitation to failure.
It believes
that the reforms that the euro zone has asked of Greece so far will only
produce a surplus of 1.5 percent and that such a lower surplus would be better
for economic growth, but it would entail substantial debt relief from the euro
zone.
DEBT RELIEF
Germany, which
faces elections in September, is strongly against any discussion of more debt
relief before Greece reaches the bailout target.
The stand-off
between Berlin and the IMF on how to deal with Greece has delayed the
participation of the Fund in the bailout for 18 months and raised speculation
that the euro zone may choose to go it alone in the end.
But Jeroen
Dijsselbloem, chairman of euro zone finance ministers, told reporters on
entering the meeting that the IMF was committed to take part.
"I spoke
to (IMF Managing Director Christine) Lagarde quite recently and she reassured
me that the IMF has still strong intentions to remain part of the program and
to take that step and to participate to the program in full," Dijsselbloem
said.
Last week, the
German finance ministry said it still expected the IMF to participate in the
bailout, rejecting a newspaper report that Berlin was preparing for a deal
without the global lender. The latest Greek bailout, the third since 2010,
started in mid-2015 and is due to end in mid-2018.
To make sure
that Greece indeed reaches and keeps the 3.5 percent surplus target, some euro
zone officials are considering asking Greece to legislate contingency measures,
which would only kick in if the country misses its targets.
But there is
no agreement on asking Athens for such a move.
The ministers
are discussing Greece's progress in reforms and when the country might be able
to complete the actions envisaged for this stage of the bailout.
Once Athens
completes the reforms for this bailout stage, it could become eligible for the
European Central Bank's government bond buying program, which would lower Greek
bond yields and make it easier for the country to return to market financing.
The completion
of the reforms, which in EU jargon is called the second review, would also pave
the way for new loans to Greece, without which it may face default in the third
quarter.
REUTERS
0 Comments