Merkel insists on high primary surplus targets

Merkel insists on high primary surplus targets

German Chancellor Angela Merkel appeared opposed Wednesday to any potential change to Greece’s economic reform program, signaling the difficulties that center-right Prime Minister Kyriakos Mitsotakis is likely to face in fulfilling his pre-election pledge to bring down the country’s high targets for primary budget surpluses and create the necessary fiscal space to deliver on promised tax cuts.

The reaction from Athens was muted, with sources noting that the government will pursue its aim to lower primary surplus targets once it has gained the trust of its partners and the markets by spurring growth.

Speaking at a news conference with Finland’s Prime Minister Antti Rinne, Merkel also said she agreed with eurozone finance ministers, who discussed the Greek program on Monday, that no change was needed to Greece’s bailout program, which foresees a primary surplus target of 3.5 percent.

“The finance ministers said they see no reason to change the framework of preconditions. And I agree with that,” Merkel said in response to a reporter’s question about a possible relaxing of the terms of Greece’s program following the election of a new center-right government.

The framework has been established and does not depend on which party the country’s prime minister belongs to, Merkel said, noting that the program was the outcome of “extensive negotiations.”

Merkel added that she had spoken to Mitsotakis by telephone and received assurances that he would quickly implement a reform program aimed at boosting growth.

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