ECONOMY

Athens is in for a Euro scolding

athens-is-in-for-a-euro-scolding

The third post-program assessment of Greece that the European Commission is set to issue on Wednesday, a draft of which which Kathimerini has seen, will be particularly critical of the government, identifying major problems in the fulfillment of prior actions and in the achievement of fiscal targets, following last month’s handouts announced by Prime Minister Alexis Tsipras.

The Commission report will also identify delays in the reduction of nonperforming loans, while the repayment of the state’s expired debts remains “disappointing,” according to the draft.

While some eurozone officials questioned the publication of the report in the midst of an election period in Greece, the Commission decided in favor of publishing the document because not doing so would also constitute a political move. That is why, reading the draft report – the final text will be completed on Tuesday – one concludes that the creditors wish to express their disagreement with the recent handouts by Tsipras and their concerns about the impact of the measures on the economy, but without wishing to make those concerns a central issue in the pre-election period.

Th report specifically notes that the May measures put the achievement of the primary surplus target for 2019 at risk, but it stops short of saying how great the distance from the target will be, as that will be calculated in the next report, due this fall.

On the government’s plan for the reduction of the primary surplus, the Commission declares it is not up to Athens to decide on that, adding that any proposal that changes the agreement reached with the country’s eurozone peers last June will need to be discussed by the Eurogroup “in the context of a revised debt sustainability analysis.” This is an indirect way for Brussels to suggest that the target revision is impossible, given that the Eurogroup has already rejected any primary surplus target adjustment.

The report will also highlight the fact that Greece overshot the primary surplus target in 2018 “mainly due to the constant reduction of the Public Investments Program,” a problem identified since April.