ECONOMY

Finance ministry says surplus target safe after EU fears of fiscal derailment

finance-ministry-says-surplus-target-safe-after-eu-fears-of-fiscal-derailment

Greece's Finance Ministry rushed to assuage concerns over the numerous handouts and tax cuts announced by the government in the run-up to the country's elections, after the European Commission expressed fears over a possible fiscal derailment.

Presenting the country's third enhanced surveillance report on Wednesday, Commission Vice President Valdis Dombrovskis told a news conference the tax cuts and bonuses for pensioners announced last month pose a risk to fiscal targets agreed with eurozone lenders.

“The package is costly and does not go in the right policy direction. It undoes some elements of important program reforms and these new measures pose a risk to achievement of agreed primary surplus target of 3.5 percent of GDP this year and beyond,” Dombrovskis said.

Responding to the EU official, finance ministry sources quoted by state-run news agency ANA-MPA said the primary surplus target for 2019 is safe.

“The Finance Ministry insists that the primary general government surplus for 2019 will be 4.1 pct of GDP, thus exceeding the target by 0.6 points and creating a corresponding fiscal space,” the ministry sources said.

“Given that the measures voted have been estimated at 0.6 pct of GDP, the Finance Ministry is certain that the 2019 target will be achieved.”

The same sources said the Commission had expressed fears over Greece's targets in the past which never materialized.