The government is asking its creditors for the option to transfer any overruns in the primary budget surplus from one year to the next, as well as for a reduction in the primary surplus targets and a change in the use of European central banks’ earnings from Greek bond holdings (SMPs and ANFAs) from servicing the national debt to financing investments, according to a senior Finance Ministry official.
These three objectives would offer the country some fiscal space, bolster growth and contribute toward the improvement of debt sustainability analyses, the same source told Kathimerini.
The transfer of primary surplus overruns could be carried out through the so-called “smoothing mechanism” that the International Monetary Fund has also proposed. The same official says this demand has the greatest chance of being approved because the government is not exactly asking for the primary surplus goalposts to be moved but rather for their application along with the option – in the case of an overrun – for the transfer of any excess resources to the following year.
The mechanism’s form has yet to be discussed, but sources say it could provide for a range of distance from the target (such as 0.3 percent of gross domestic product) and in case of an overrun one year it could allow for a shortfall the next.