ECONOMY

Greece requests fiscal space to deal with Covid-19 effect

greece-requests-fiscal-space-to-deal-with-covid-19-effect

Greece has requested European creditors to give some fiscal space to deal with the necessary extra spending on the management of the novel coronavirus epidemic and increased migration pressure, Finance Minister Christos Staikouras said on Monday.

The Greek official welcomed European Stability Mechanism (ESM) Managing Director Klaus Regling to the Greek capital to discuss the prospects of the Greek economy ahead of the next post-bailout review.

Greece posted positive results in recent months, meeting fiscal targets set, and continues on the reform path to leave behind the 10-year debt crisis, but needs breathing space, especially after the outbreak of the Covid-19 epidemic and the pressure from tens of thousands people on its borders with Turkey in the past few weeks, he noted.

"We will continue to materialize the commitments undertaken by our country. However, we seek the needed fiscal space to implement growth boosting policies, in particular to the direction of reduction of taxes for households and businesses, which will contribute to the achievement of high and sustainable growth," Staikouras said during joint statements after talks with Regling.

Athens has repeatedly requested in recent months lower primary surplus goals for the next three years compared to the initial targets set under bailout programs, arguing that the improved performance of Greek economy is a guarantee that the Greek debt load will be sustainable.

"So far data and estimates show that the coronavirus impact on the economy will be temporary, but eventually more significant and painful than initially estimated," Staikouras said on the repercussions on European and Greek economy.

The situation should be re-evaluated at the Eurogroup meeting on March 16 and specific initiatives should be adopted to tackle the negative repercussions of the virus' spread on growth and public finances, he said.

The fiscal impact of these measures should be exempted from the existing framework in line with the flexibility envisioned in such emergency situations under European rules, the Greek minister added.

"We have requested and seek the exemption from the state budget of certain expenses made to manage the increased pressure due to the transfer of people to our eastern borders, on land and at sea, so they are not taken into account when calculating fiscal balance," Staikouras explained.

On his part, the ESM chief expressed understanding and stressed that despite any obstacles Greece should continue hard work to progress.

"The European fiscal framework allows for some flexibility for unexpected developments outside the control of the government. Eurogroup has to decide on where that flexibility should be used and to what extent, but I will be prepared to support some of the ideas that you have in this direction and I know that Eurogroup next Monday will talk about that," Regling said.

"I stress that a lot of work is still needed to complete successfully the next review and as you know the next review will be the basis for approving the next set of debt related relief measures," he added. [Xinhua]