FINANCE

Primary surplus target at 2%

Athens aspires to secure a degree of flexibility in the Stability Pact provisions later this year

Primary surplus target at 2%

Athens will be asked to produce primary budget surpluses of 2% of gross domestic product – or about 5 billion euros – as of 2023, Alternate Finance Minister Thodoros Skylakakis said on Tuesday, referring to the period after the pandemic, with the introduction of the new Stability Pact rules.

He said “an agreement will not be far off 2% of GDP” – i.e. close to the level the country had committed itself to (2.2%-2.6%) for the period after the enhanced surveillance.

The pandemic has led to an exemption from the provisions of the European Union’s Stability Pact, which has also applied to Greece, but as of next year the rules will return, with the changes to be agreed in the coming months.

Skylakakis added on Parapolitika FM radio that the government will seek to secure that amount of the primary surpluses through the growth rate. In 2021 the primary deficit stood at around 7% of GDP, based on provisional figures, while for 2022 the target is to contain it to 1.2% of GDP.

The existing rules provide for the reduction of the debt by one-20th of the amount above the limit of 60% of GDP, but that would have meant Greece would have to secure primary surpluses of 6-7% every year, which is practically impossible.

Decisions will take time; a first debate on European level may begin at next month’s Eurogroup in Paris, with the French Presidency seeking to secure some decisions during its mandate even though France will have a presidential election.

Speaking on the same radio station on Tuesday, Minister Christos Staikouras said the discussion will not be an easy one, as there are many different views and the target for Greece’s primary surplus next year will be determined by October, ahead of the new budget. In March the European Commission is expected to table its proposal, which will set the negotiation process going.

Greece is looking forward to a compromise solution with flexibility that will take into account each member-state’s peculiarities.