The target for a primary budget surplus of 3.5 percent of gross domestic product does not apply anymore, Finance Minister Christos Staikouras assured after Monday’s Eurogroup teleconference, as the eurozone finance ministers aimed at maximum flexibility to tackle the impact of the coronavirus epidemic.
According to sources, Greece is expected to spend an additional 1.8 billion euros of European subsidies in coronavirus-related expenditure, and will obtain extra leeway in its budget for similar spending and as a result of the projected rapid decline in revenues.
“The drop in state revenues and the strengthening of spending on employment due to the shrinking of economic activity will be taken into account for all member-states, in the fiscal rules, the targets and requirements, thereby reducing them,” Staikouras explained.
“It was also agreed that the budgetary consequences of the temporary fiscal measures taken to tackle the situation, such as the interventions for containing the spread of and taking care of those who have contracted the virus, the strengthening of liquidity to enterprises and sectors harmed, and the support of employment will be exempted from the assessment of fiscal rule compliance. Therefore this spending is excluded from the fiscal performance of the country,” the finance minister said.
European Stability Mechanism (ESM) chief Klaus Regling acknowledged the fact that Greece is facing a double whammy, as besides the Covid-19 outbreak it is having to deal with the migration/refugee crisis. He went on to remind that Greece’s borders are also the borders of the European Union.
In this context, Staikouras said, it was recognized that the expenditure on migration will be added to the coronavirus spending’s exemption from the calculation of the Greek post-bailout program’s primary budget surplus assessment.
Regling added that since his visit to Greece last week, he has been impressed by Prime Minister Kyriakos Mitsotakis’ resolve to implement the necessary reforms.