Bailout review process may be delayed

15 January 2016
1005 Views

It appears that the representatives of Greece’s creditors may not arrive in Athens on Monday after all as they have just requested additional data on the 2016 state budget, making it rather unlikely that Finance Minister Euclid Tsakalotos’s statement this week that the review will be concluded “within four weeks,” or by the end of February at the latest, will prove correct.

The government’s objective is to see the negotiations through quickly. However, the signs from the creditors are that it will be very difficult for this first formal review of the bailout program to be completed anytime soon. The first big issue is the social security reform and the second, which is potentially more problematic, is the coverage of the fiscal gap with new measures.

The fiscal gap is a major bone of contention for Athens and its creditors, as the government expects the budget to perform better than officially forecast, leading to a small primary surplus from 2015, while the institutions believe there is a gap that ought to be plugged with new measures during the course of this year.

The European authorities have calculated the fiscal gap for this year at around 900 million euros, while the International Monetary Fund puts it at 1.8 billion, or 1 percent of gross domestic product.

The Finance Ministry foresees a 1.9-billion-euro surplus in last year’s revenues, with tax revenues alone beating their target by 700 million, according to ministry officials. They stress that most of the extra revenues have come by way of permanent measures such as the value-added tax, meaning that they will also have a positive impact on the budgets of the following years, starting from 2016. In this context the ministry expects 2015 to have ended with a small primary surplus, at around 0.25 percent of GDP, which would also improve the picture of the following budgets.

“If the creditors also acknowledge that the fiscal gap is smaller than what was anticipated, then no additional fiscal measures will be required,” said a ministry source, showing the strategy of the Greek side in the talks. Should the two sides agree on that, then it will be much easier to agree on the updated midterm fiscal program for 2017 and 2018.

You may be interested

Odysseus’s Ithaca – Five beautiful beaches you must visit
GREECE
shares11 views
GREECE
shares11 views

Odysseus’s Ithaca – Five beautiful beaches you must visit

Panos - Jul 27, 2021

Ithaca is one of those hidden gems that Greece has to offer the inquiring traveller. The island, known as the…

Turkish businessman pays €76,000 fine in Mykonos for Covid-19 violation on yacht (video)
FINANCE
shares24 views
FINANCE
shares24 views

Turkish businessman pays €76,000 fine in Mykonos for Covid-19 violation on yacht (video)

Panos - Jul 27, 2021

A Turkish yacht owner paid a total of €76,000 for violating Covid-19 regulations in Mykonos. The businessman was fined for…

Weather Greece: 10-day heatwave coming
GREECE
shares14 views
GREECE
shares14 views

Weather Greece: 10-day heatwave coming

Panos - Jul 27, 2021

A 10-day heatwave starts in western Greece today with temperatures that will reach and exceed 40 degrees Celsius. Meteorologists warn…

Leave a Comment

Your email address will not be published.