The European partners in Athens will assess the impact of the socio-economic measures presented in early May by Alexis Tsipras, the Greek Prime Minister, on the Greek Republic's budget in the coming weeks.
“We don’t have a complete assessment, but our preliminary assessment indicates that with these measures, the primary surplus target [excluding debt service] of 3.5% of GDP this year might not be reached by a significant margin”, said Klaus Regling, managing director of the European Stability Mechanism (ESM), after the Eurogroup meeting on Thursday 16 May.
He expressed the “doubts” of the euro area permanent rescue fund about the measures announced by Mr Tsipras earlier this month. Some measures, such as tax cuts, have already been passed by the Greek Parliament.
“The announced measures might have a significant fiscal impact [...] That’s what we need to assess”, said Pierre Moscovici, Commissioner for Economic and Financial Affairs. He pointed out that both the budgetary aspect and the impact on growth and social inclusion of these measures would be examined.
In the framework of the release of the third financial assistance plan, to which Athens was constrained until last August, the Greek authorities must ensure that they have a primary budget surplus of 3.5% of GDP each year until 2022, then an average of 2.2% of GDP per year from 2022 to 2060 (see EUROPE 12046/1, 12077/1).
Last year, this surplus reached 4.4% of GDP (see EUROPE 12241/21). “I would not say that they [the Greek authorities] have questioned the targets [today]”, Mr Regling said.
Mr Tsipras also envisages that this threshold could possibly be lowered to 2.5% of GDP from 2020 to 2022 and that part of the cash buffer intended for Greece's return to the sovereign debt markets could be used, if this were the case, to cover debt services.
For the managing director of the ESM, this option would only potentially be discussed in the context of the draft budget plan for 2020.
Remaining cautious, Mário Centeno, President of the Eurogroup, recalled that the Eurogroup expects that the commitments made will “continue to be respected, so that Greece continues to enjoy investors’ confidence in the future”.
The results of the assessment of the targeted socio-economic measures will be presented in the third report under the enhanced surveillance framework in early June. Discussions between Athens and its institutional creditors could then take place at a later stage. (Original version in French by Lucas Tripoteau)