ECONOMY

Finance Ministry plays down Commission’s warning on fiscal gap, sees small shortfall

Reacting to a European Commission report that suggests Greece facing a substantial fiscal gap between 2015 and 2016, Finance Ministry sources in Athens insisted on Tuesday that the shortfall will be smaller than expected and can be filled relatively easily.

The ministry sources said that the gap will not be 1.8 percent of GDP in 2015 and 2.2 percent of GDP in 2016, as has been reported, but 2.2 percent of GDP over the two years.

As a result, the amount of money that Greece would need to find is 4.2 billion euros, not 8 billion as was suggested. The ministry believes that in reality this amount could be as low as 2.4 billion euros.

Sources said that Greece would not need to adopt any extra spending cuts to gather these funds and would instead seek to draw them from rising revenues. The Finance Ministry estimates that a 5 percent rise in general government revenues in 2015-16 will suffice.

The final amount will be known in the autumn, when the troika will be back in Athens for a quarterly review.

On Monday, the Eurogroup agreed to release 7.5 billion euros of bailout loans for Greece. It is likely that 4.2 billion euros of that will be transferred to Athens this week.

However, the remaining 3.3 billion will be disbursed in June after Greece has completed a number of “prior actions” agreed with the troika.