BoG expects a higher primary surplus

BoG expects a higher primary surplus

The Bank of Greece is expecting a higher-than-anticipated primary budget surplus for this year and insists on the need for a reduction to future targets, while a European Central Bank official refuted a Reuters report suggesting Frankfurt was in favor of a target reduction.

Bank of Greece Governor Yannis Stournaras on Tuesday met with the creditors’ representatives and, according to central bank sources, presented BoG estimates for a primary surplus of 0.8 percent of gross domestic product this year, against a target for 0.5 percent, with recession matching the 0.3 percent target. For 2017 the central bank expects GDP to expand 2.5 percent, against a target for 2.7 percent.

The same sources said on Tuesday that Stournaras reiterated to the creditors the central bank’s position for a reduction to the future primary surplus targets, adding that this also has the backing of the ECB.

Later on Tuesday, a Frankfurt official stated that “it is not correct to say that the ECB supports a lower fiscal target for Greece after 2018.”

The BoG’s position for the country’s exit from the crisis is that this will be achieved via privatizations, reforms and investment. It believes that investment in particular is a key factor for the economy to move on, but certain issues such as land usage permits have to be resolved first. BoG officials said after Tuesday’s meeting that “most of what should be done is already done; there is only a handful left to do.”

On the deposits front, BoG sources said on Tuesday that the net return into bank accounts since May 25 (when the first bailout review negotiations were concluded) to date amounts to some 4.6 billion euros.

Wednesday’s agenda of meetings for Finance Minister Euclid Tsakalotos, Economy Minister Giorgos Stathakis and the representatives of the creditors contains the strategy for growth, as well as the thorny issues of an expenditure review and of social benefits. Another agenda item is the staffing of the new Independent Authority for Public Revenue, plus some other tax issues, and the reform of the public administration. Creditors will also discuss labor relation changes with Labor Minister Giorgos Katrougalos.

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