Greece posts primary surplus; debt relief beckons

Greece posts primary surplus; debt relief beckons


By Lefteris Yallouros – Greece

Greece’s primary surplus totaled 3.4 billion euros in 2013 (excluding the financial support offered to banks), Alternate Finance Minister Christos Staikouras said on Wednesday. The primary surplus for 2013 was based using Eurostat’s methodology and was rubber-stamped by the European Statistics Bureau Wednesday.

The confirmation is crucial to Greece as it paves the way for talks to begin over debt relief. Having achieved a primary surplus for the first time since the Eurozone crisis earlier than expected, Athens will now call on its lenders to deliver on their promise for debt relief.

The likeliest scenario involves the extension of bailout loan maturities and having interest rates lowered significantly.

Simon O’Connor, the European Commission’s economic spokesman, said Greece’s primary surplus – before interest payments and some other one-off payments – last year reached €1.5bn, or 0.8 per cent of GDP, a target that formally launches talks over additional debt relief.

“We expect this conversation to begin later in the year,” said Mr O’Connor. “It may begin over the summer, it may continue into the autumn but I can’t be more precise than that at this stage.”

“This is a reflection of the remarkable progress that Greece has made in repairing its public finances since 2010,” said Mr. O’Connor. “We are of the opinion that Greece’s debt is sustainable provided that it remains compliant with the adjustment program in the coming years.”

Greek sovereign debt remains at dizzy heights, standing at 175 per cent of gross domestic product in 2013, Eurostat announced. With the primary surplus achieved, Greece’s creditors must begin getting the country’s debt levels “substantially below” 110 per cent of GDP by 2022 and Athens is expected to raise the issue of debt restructuring at a eurogroup working meeting on Thursday.

According to government officials, the approval by the Euro Working Group of a 6.3 billion euro tranche to Greece, also set to go through Thursday, will certify that the country has met almost 90 percent of targets set in its adjustment program.

“Four years after Greece was driven to the support mechanism, the country and its economy are clearly in a better position,” said Greek Deputy Finance Minister Christos Staikouras.

Ahead of crucial elections at local and EU Parliament level in May, Prime Minister Antonis Samaras is eager to show voters that the country is emerging from the crisis and won’t need another bailout. Commenting on the primary surplus approval, Samaras said it confirmed the economy’s sharp turn thanks to the sacrifices of the Greek people and that the country was now slowly exiting the crisis.

Though the dual election battle won’t directly impact the government’s narrow majority in parliament, it is considered a first test for Samaras and the coalition government since coming to office almost two years ago. Putting the economy back on track is the trump card Samaras hopes will see him survive May’s unofficial referendum.