Bank of Greece: “Alarm bells” for this year’s surplus

The Governor of the Bank of Greece, Yiannis Stournaras characterized the target for a primary surplus of 3.5% for this year as “unattainable”. Speaking at an investment conference, Mr. Stournaras estimated that Greece will achieve a primary surplus of 2.9% of GDP this year against the target of 3.5% of GDP, while stressing that high primary surpluses burden the growth of the economy.

He said, “the budget outcomes of the general government, from a deficit of 15.1% of GDP in 2009, recorded, for the third consecutive year, a surplus of 2018 (1.1% of GDP). The primary balance as a percentage of GDP (i.e. the balance of the general government excluding interest expenses) has improved by more than 14 percentage points since 2009 (then it was a deficit of 10.1% of GDP), and records a surplus over the last three years. In 2018, the primary balance (in terms of enhanced supervision) stood at 4.3% of GDP against a target of 3.5% of GDP. For 2019, the forecast of the Bank of Greece with the data available so far is a primary surplus of 2.9% of GDP against a target of 3.5% of GDP.”

At the same time, Mr Stournaras called for the targets for primary surplus to be reduced until 2022, as well as tax rates.