Following a press conference after the eurozone finance ministers’ meeting on Thursday, Eurogroup President Mario Centeno said that the Greek government has informed the Eurogroup about the package of measures legislated by the government that are relevant to the agreed fiscal path and the aim is to discuss these in June, on the basis of the 3rd enhanced surveillance report.
“Greece has overachieved on fiscal targets so far. We expect the commitment with the Eurogroup to continue to be respected so that Greece continues to enjoy the investors’ confidence in the future,” Centeno said.
European Stability Mechanism (ESM) chief Klaus Regling said the ESM was “worried” about the measures, however, noting that spreads had risen by 50 basis points. He pointed that some of the measures had already been implemented and the assessment of the package was not yet complete but, based on a preliminary assessment, Greece might fail to reach the primary surplus target of 3.5 pct of GDP in 2019 “by a significant margin” that would probaby be even greater in 2020.
“We are also worried about the composition of the measures, which are not growth-friendly in the medium- and the longer-term,” he added.
When asked about the possibility of reducing primary surplus targets for Greece, Regling said that the disagreement was “premature” since for the current year Greece retained the 3.5 pct of GDP target, but there were concerns whether the measures that Athens had announced were compatible with this target. Consequently, he said, the plan concerned the next year’s budget and would not be discussed yet.
On whether this might affect approval of an early repayment of the International Monetary Fund (IMF) loans, he said that a decision of the ESM member-states was pending and it remained to be seen.
European Commissioner for Economic and Financial Affairs Pierre Moscovici said that the Commission’s assessment will take into account both the fiscal impact of the measures and their effect on growth and society, which are also “targets” that need to be achieved. He noted that Greece was no longer in a programme and therefore had the freedom to plan its own policies but also had commitments in the framework of enhanced surveillance to meeting some basic fiscal targets and to continue important reforms.
He noted that the measures announced by the government could significantly impact fiscal targets, which would have repercussions on existing agreements, and emphasised that Greek authorities must continue to work closely with the institutions in order to maintain the “positive momentum” and the trust that had been built, so as to achieve the common goal of “sustainable recovery”.