ECONOMY

Athens expects smaller-than-estimated fiscal gap

Greece expects its budget gap over 2015 and 2016 will be “well below” 2 percent of GDP as its economy benefits from a bumper tourism season this year, a Finance Ministry official said ahead of negotiations with European Union and International Monetary Fund inspectors next week.

The fiscal gap – or the amount by which Greece is expected to fall short of budget targets set by EU/IMF lenders – will be a major issue for discussion when the inspectors begin their latest review of Greece’s progress under its bailout.

In a report in July, the European Commission estimated the fiscal gap at 2 percent of GDP over 2015-16, or about 4 billion euros.

The official confirmed that Athens now expected Greece’s economy to shrink 3.8 percent this year and grow 0.6 percent next year, paving the way for a smaller-than-expected fiscal gap for the following two years.

Athens hopes to convince its lenders it can cover that fiscal gap without new across-the-board austerity measures.

[Reuters]