ATHENS: 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 program and more than previously forecast, an EU official said.
Better-than-expected figures could smooth bailout talks, which have stalled for months over fiscal targets and the pension and labor 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 program, 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 program ends.
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 euro zone 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 program to guarantee more discipline, has much lower projections. In February it estimated Greece to reach a primary surplus of 1 percent this year and 1.5 percent in 2018.
The IMF’s less optimistic view leads it to believe Greece needs new debt relief measures to have a sustainable economy in coming years. The fund’s participation to the bailout program is linked to a deal on debt relief granted by lenders or on new austerity measures imposed on Greece.
Greece has said it will support a declaration marking the EU’s 60th birthday but needs the bloc’s backing against IMF demands on labor reforms.
The EU official also said the proceeds from Greek privatizations, including the port of Thessaloniki and Athens international airport, were expected to reach 2.4 billion euros this year and 1.9 billion euros in 2018. The Greek government had expected revenues of 2.7 billion euros this year.
