ECONOMY

Greece’s fiscal targets may be set to ease

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The Eurogroup council of eurozone finance ministers will on Thursday consider suspending Greece’s obligation to achieve a primary budget surplus of 3.5% of gross domestic product.

As a eurozone official said on Wednesday, “there is no doubt that Covid-19 is changing what it is rational for ministers to expect from Greece. The fiscal targets for Greece in 2020, and possibly 2021 too, will be assessed in a different light.” The same official refused to comment on the possibility of a permanent reduction of targets, saying this is something that “has not been discussed.”

Thursday’s Eurogroup will discuss the sixth enhanced surveillance report and the possibility of the disbursement of the third tranche of eurozone central banks’ earnings from Greek state bond holdings (SMPs and ANFAs).

The same source said the report records that the Greek authorities may have adjusted their policy to tackle the pandemic but the overall assessment is positive and the government remains focused on its reforms agenda.

The eurozone official noted that due to the measures to contain the coronavirus and the country’s dependence on tourism and shipping, the effects of the pandemic are going to hit the Greek economy hard and “could exacerbate existing weaknesses” in the credit sector.

Among the issues on the table on Thursday will also be the election of a new Eurogroup chief after the announcement by incumbent Mario Centeno that he will resign from Portugal’s Finance Ministry on June 15. The candidacies are set to emerge “within the next couple of weeks,” the eurozone official added.

The July 9 election date for a new Eurogroup chief could change if the word on a European summit on that date proves correct.

The 27 European Union ministers of economy and finance will also meet to discuss the European Commission’s new 750-billion-euro recovery plan. This is despite the eurozone official noting that the issues of substance are not the competence of the finance ministers but rather that of the heads of state and government.