Greece Stops Paying Bills to Hike Primary Surplus, Get Troika Deal

Greek Prime Minister Alexis Tsipras, right, speaks with German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels on Friday, March 10, 2017. Photo: Eurokinissi/EU

ATHENS – Greece has surpassed its target for a primary surplus – doing so primarily by not paying its bills – hoping to show international lenders debt relief should be on the table.’

Eurozone lenders estimate Greece had a primary surplus between 2 and 3 percent of its Gross Domestic Product in 2016 but that doesn’t include the interest on 326 billion euros ($352.32 billion) in three bailouts, the cost of running cities and towns, social security, state enterprises and some military expenditures.

Those costs, coupled with a staggering debt owned vendors, private creditors, pharmacies and others would otherwise show a huge deficit.
But the target, even with its variables, was surpassed, the government said, as reported by the Reuters news agency.

Those figures could pave the way for renewed talks on terms of a third rescue package, this one for 86 billion euros ($92.94 billion), as the negotiations have dragged on since July, 2015 when Prime Minister and Radical Left SYRIZA leader Alexis Tsipras sought and accepted the money after vowing he never would.

The Troika of the European Union-European Central Bank-European Stability Mechanism wants post-2018 additional pension cuts, taxes put on the poor and stripping workers rights, including mass firings in the private sector to insure European banks get paid back first
Under the pending deal, in which most of the monies have been withheld until Greece imposes more austerity, a primary surplus of 0.5 percent was supposed to be reached.

An unnamed EU official told the news agency that Greek authorities – not the lenders – estimate the surplus could be seven times higher without noting it’s because almost nobody owed money by the government is being paid in the meantime.

This would be already in line with Greece’s target for 2018, when the program ends. “The Commission and the institutions (Troika) are still assessing the data and have so far given a more cautious estimate of between 2 percent and 3 percent of GDP,” the official said, noting this would still be “a massive overachievement.”

In its last economic forecasts released in February, the European Commission had estimated a primary surplus for 2016 of 2 percent.
The International Monetary Fund (MF), which took part in two first bailouts of 240 billion euros ($259.38 billion) beginning in 2010 but has stayed out of the third until the Premier agrees to more debilitating measures for workers, pensioners and the poor, doesn’t believe the government estimates and puts the surplus at only 0.9 percent.

In February, it estimated Greece to reach a primary surplus of 1 percent this year and 1.5 percent in 2018.

“The reason for the discrepancy with EU estimates relates to the use of overly conservative assumptions by the Fund on both the revenue and the expenditure side,” the EU official said, noting that the IMF was “very slow” in updating its projections after actual data are released.

The IMF’s less optimistic view leads it to believe Greece needs new debt relief measures to have a sustainable economy in coming years but wants the Troika to take the hit while the Washington, D.C.-based agency wants all its money back first.