Revenues, handouts worry creditors


Greece’s creditors are expressing reservations over whether the country will achieve a primary budget surplus of 3.5 percent of gross domestic product next year, saying they expect the figure to come in 0.2-0.3 percent of GDP below the target (360-540 million euros). They are also concerned about the attitude of Athens as regards the so-called social dividend, even though Finance Minister Euclid Tsakalotos pledged last year that the government would not distribute a “13th pension.”

In their first meeting since arriving in Athens for the third review of the country’s third bailout, the creditors’ mission chiefs sat down on Monday with Alternate Finance Minister Giorgos Houliarakis and Dimitris Liakos, deputy minister to the prime minister, for talks focused on the course of this year’s budget and that for 2018.

The government officials also presented figures showing the state’s repayments of expired debts to third parties, triggering the disbursement of an outstanding subtranche of 800 million euros. A Finance Ministry official said the money would be released thanks to the net reduction of state arrears by 1.5 billion euros from April to September.

On the fiscal side, the creditors estimate that the overperformance of social security revenues and reduced spending on pensions are not sustainable, and will lead to a shortfall of up to 0.3 percent of GDP next year. However, they acknowledge that their forecasts are not certain at this point, while the Greek side is insisting that the fiscal targets will be met in full.

In any case, the creditors want to obtain a better picture of the 2017 budget so as to establish the extent of the anticipated shortfall compared to the original agreement. This means that any decisions will be put off till end-November, when the creditors return to Athens, after the October data on the execution of the budget have been released – including the summer’s value-added tax collection figures from small and medium-sized enterprises.

A government official stressed late on Monday that the creditors agree the 2017 primary surplus will beat its target of 1.75 percent of GDP: He said the government forecasts the primary surplus will reach 2.2 percent of GDP, with the excess set to top 800 million euros, and that discussion on the 2018 fiscal figures will begin on Thursday.