Samaras Tells Merkel No Budget Gap

Greek Prime Minister Antonis Samaras wants to break ranks with German Chancellor Angela Merkel over Greek debt relief

Greek Prime Minister Antonis Samaras, visting Berlin, told German Chancellor Angela Merkel that despite claims by international lenders that there’s a big gap in the country’s 2014 budget that could require more austerity measures, that there is no hole and that he will delay asking for debt relief until a primary surplus that is expected is achieved, likely next year now.

Samaras said at a news conference with Merkel that he was optimistic there would be a deal on a new aid tranche with the Troika of the European Union-International Monetary Fund-European Central Bank which has delayed a one billion euro ($1.37 billion) installment because of what it said was a budget gap of as much as 2.9 billion euros.

The Greek government had insisted it was only 500 million euros and now Samaras said there’s none at all although he didn’t elaborate on why there was such a sharp difference between the estimates of the two sides. He reiterated his pledge that there would be no more of the pay cuts, tax hikes and slashed pensions beyond what had already been agreed and insisted upon by Merkel, whose country puts up the biggest share of loans.

The Greek Prime Minister spoke of “light at the end of the tunnel” after Athens confirmed it would emerge from a six-year recession next year and more than doubled its forecast for the budget surplus before interesting payments for this year.

Posting a primary surplus would open the way for Greece to ask for debt relief from the Troika whose envoys left Athens this week but will return in December to check the books and determine whether the next installment should be released. Samaras also has given Parliament the budget for next year already without reaching any agreements with the lenders on the budget gap or other delayed reforms.

“This possibility (of debt relief) will become a reality only after on April next year, the final results about the primary surplus will come about. Then a decision will be taken,” said Samaras.  “The current agreement is on track. We are on track. We don’t ask for anything else,” he said, standing beside Merkel.

Earlier, reports in the German media said he would ask for the debt relief in the form of lower interest rates and a longer time to repay the loans. The Troika is putting up $325 billion in two bailouts.

He was praised by her for sticking to tough reforms Germany has insisted upon in return for being the biggest contributor. Merkel said she was impressed after Samaras told her, “There’s no doubt more has to be done. That’s why we are continuing. Remember how Greece was 15 months ago. We are entering a recovery phase after seven painful years of recession.”

“We already see the first fruit of the attempts of the Greek government. The most impressive achievement is the primary surplus. The Greek Prime Minister presented me with a series of impressive results …. Greece has made important progress,” Merkel said. She noted he told her Greece is aiming at bringing in more foreign investments.

Samaras, who’s been touting Greece as a burgeoning “success story,” and predicting it would recover from a crushing economic crisis that has brought record unemployment and poverty, said despite those efforts, three years of austerity measures and bailouts haven’t done enough. Merkel and German Finance Minister Wolfgang Schaeuble had already ruled out debt relief for Greece

At a landmark Eurogroup summit in November 2012, Eurozone officials had said that Greece’s achievement of a primary surplus would allow for a discussion to begin on debt relief, but now the lenders are backing away from it, skeptical that Greece really has achieved the benchmark.

Germany has repeatedly ruled out a second debt haircut for Greece. But Samaras is not expected to a seek another write-down on Greek debt, according to German reports. Rather, he is expected to ask for a reduction in the interest rates on Greece’s foreign loans and an extension on the maturities..