BUSINESS

Eurogroup chief dampens hopes of fiscal leeway in Athens

TAGS: Economy, EU

Eurogroup chief Mario Centeno does not expect Greece to deviate from its commitments to international creditors as it exits the bailout, dampening hopes in Athens of a certain amount of leeway once the final bailout ends in August.

“I expect Greece not to deviate from previous commitments and, at the same time, to use the scope of policy options that arise from the program exit in a smart and responsible way,” the head of the group of eurozone finance ministers told Naftemporiki daily in an interview published on Wednesday.

“Going back is not really an option,” he said when asked to comment on suggestions by the government that it will reduce the scope of planned cuts to pensions and other measures.

Centeno, who is also the finance minister of Portugal which left its program four years, said that Greece can learn from his country on how to gradually reduce income tax without harming competitiveness or fiscal consolidation but also on how staying the course yields results.

“Market access is not an automatic blessing at the end of a program,” he said. “You earn investors’ trust after several issuances before the end of the program and then you build it up with credible policies after the program.”

The Eurogroup president also defended the agreement reached last month between Greece and its creditors for measures to lighten the country’s debt pile but also for strict post-bailout supervision.

“Enhanced surveillance in the post-program phase will help Greece to chart its economic path in a credible way,” Centeno told Naftemporiki. “Credible for the European creditors, which have a large stake in Greece; credible for the markets, whose confidence is critical.”

Responding to concerns that the agreement does not go far enough to make Greece debt sustainable in the long term, Centeno said “there is a commitment from the Europeans to consider more debt relief, if needed.”

Online