Fiscal gap seen as initial problem in technical talks

Technocrats representing the country’s creditors had their first exchanges with government officials in Athens, focusing on fiscal and macroeconomic issues amid concern that Greece will have lower than previously forecast growth and will have to find extra savings to meet its primary surplus target.

The visiting experts are based at the Hilton Hotel, where they are meeting Greek officials and collecting information on the execution of the country’s budget and the progress of the economy in order to assess what measures might be needed later this year.

Sources in Brussels told Kathimerini that the technical teams will remain in Athens for around 10 days and that extra staff will join the personnel already here from Monday. They will focus on structural reforms and the banking sector.

For now, they are concentrating on fiscal and macroeconomic matters. The first concern is that there is a fiscal gap of around 2 billion euros to fill this year if Greece is going to produce a primary surplus of between 1 and 1.5 percent of gross domestic product. At the moment it appears that Greece is heading for a negligible surplus, meaning more measures could be required either to reduce spending or increase revenues.

In terms of growth, the visiting technical teams believe that the European Commission’s estimate for 2.5 percent growth in Greece this year is too optimistic, even though it was recently revised downward. If this figure is lowered then the projected fiscal gap will also grow.

Greece paid on Friday its latest installment of 350 million euros to the International Monetary Fund but liquidity continues to be a challenge for the government. Finance Minister Yanis Varoufakis indicated on Friday that the government might be willing to suspend its pre-election pledges as part of a compromise to encourage lenders to ease its liquidity problems.

“If this means that for the next few months when we are having negotiations we suspend or delay the implementation of our promises, we should do precisely that to build trust with our partners,” he said.

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