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Economy

EU Signals Willingness to Ease Greek Budget Targets

February 7, 2020

ATHENS — The European Union’s new economy commissioner says Greece’s bailout lenders are willing to discuss a request by Athens to ease strict budget targets that would help speed up the country’s recovery.

While visiting Athens Thursday, Paolo Gentiloni sai d discussions could begin as soon as next month to ease the targets that were imposed to ensure Greece continues with its cost-cutting reforms and repays rescue loans provided between 2010 and 2018 by other eurozone members and the International Monetary Fund.

Gentiloni, who assumed office on Dec. 1, said the Commission was waiting for the results of an inspection into Greece’s public finances carried out last month in conjuction with the European Central Bank, a eurozone bailout fund, and the IMF.

“I think that there are all the (right) conditions to have a good report, and a good report could pave the way to decisions, and also to open the discussion about the possibility to change our targets on surplus,” Gentiloni, a former Italian prime minister, told reporters in Athens.

As part of its commitments to bailout lenders, Greece has pledged to maintain a high primary budget surplus — the annual state balance before debt servicing costs — worth 3.5% of annual GDP through 2022.

But the Greek center-right government wants to lower that target, starting next year, arguing that the country can now tap bond markets at historically-low interest rates as its credit rating approaches investment grade.

Bailout lenders had previously been reluctant to discuss Athens’ request, fearing it could undermine the country’s reform commitment and ability to repay bailout loans as Greece struggles with a massive national debt of around 180% of GDP.

Christos Staikouras, the Greek finance minister, said the commissioner’s remarks were a vote of confidence in the seven-month old pro-reform government.

“We are regaining confidence at home and abroad … the economy is improving and stabilizing,” Staikouras said. “Greece is returning to normal.” ___ Follow Gatopoulos at https://twitter.com/dgatopoulos and Nedeljkovic at https://twitter.com/SrdjanTV

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