US praise for Greek reforms came without support on primary budget surplus issue

22 July 2016
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US Treasury Secretary Jack Lew’s lightening visit to Athens on Thursday had practically all the elements that the leftist Greek government could ask for, namely, promises of debt relief and Washington’s praise for a series of memorandum-mandated reforms that the former passed – often in direct conflict with its pre-election promises and ideological orientation.

Nevertheless, what Athens didn’t hear from Lew was support for lower primary budget surplus targets after 2018, when the current “Greek program” (third bailout) is due to end.

The lack of support on the matter comes after an emphatic “no” by EU Commissioner Pierre Moscovici, who was in the Greek capital for talks with the government and opposition leadership this past week.

In response to repeated press questions, Lew merely noted that Athens should find compromises with its institutional creditors.

The last year of the program (2018) features an utterly ambitious 3.5-percent primary budget surplus target, as a percentage of GDP.

According to government officials who spoke to “N” on Thursday, tough negotiations with creditors in the autumn are expected, while they added that recent statements by European leaders were more-or-less expected, given that both the debt relief and primary budget surplus issues have “just opened”.

The Greek government, but the main opposition as well, want lower annual primary budget surplus targets in order to funnel surpluses to either sensitive sectors of society (health, education) or even reduced taxes.

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