Last year, Greece managed to achieve better results on key budget indicators than predicted by a bailout agreement with international creditors. However, Greece’s total deficit doubled due to bank restructuring costs, according to data from the statistical office Eurostat.
The primary surplus, which does not include debt servicing costs, is 0.7 percent of gross domestic product, the European Commission said today. “This is significantly better than the target of 0.25 percent of GDP, set by the (bailout) program (for Greece),” a commission spokesman said, according to Reuters.
The key budget balance is a key indicator for creditors to assess how Greece is meeting the terms of last summer’s bailout. The Greek government hopes to avoid additional austerity demands from the International Monetary Fund (IMF) with the help of last year’s favorable results.
“This result undermines the credibility of the IMF’s estimates and those who talk about the additional steps they think Greece needs“
The fact that Athens exceeded the target set in the main budget casts doubt on the IMF’s pessimistic forecast and its insistence on fresh cuts, a Greek government official said. “This result undermines the credibility of the IMF forecast and those who talk about additional steps Greece says it needs to meet its 2018 targets,” the official said.
Eurostat estimates Greece’s total budget deficit last year, excluding one-off aid to financial institutions, at 3.2 percent of GDP. Including restructuring costs, the deficit increased to 7.2 percent from the previous year’s 3.6 percent of GDP.
Protracted negotiations
Greece this week continued negotiations with representatives of international creditors to conclude a key review of implementation of last year’s bailout program. Negotiations to comply with the terms of the bailout program have been under way since January and have been interrupted twice over a longer period due to disagreements between creditors and disagreements with Athens. Without expert approval from lending institutions, Athens cannot get up to five billion euros (135 billion crowns) from the bailout program and repay its debts to the IMF and European Central Bank.
Creditors disagree whether Athens is able to meet the program’s fiscal targets. For primary balance, European lending institutions expect that Athens will achieve a planned surplus of 3.5 percent of GDP in 2018, but according to the IMF, Greece will have to take further austerity measures to achieve that result.
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