Merkel election triumph keeps up pressure on Greece

Merkel election triumph keeps up pressure on Greece

 

By Lefteris Yallouros – Athens

Greece is on track to achieve a primary budget surplus this year, data released Monday shows.

The country’s General Accounting Office – responsible for drawing up the budget – announced a primary surplus of EUR 2.861 billion in the first eight months of 2013. The country’s fiscal deficit stands at EUR 2.5 billion for the same period while tax revenue targets are not met by EUR 727 million in the Jan. – Aug. 2013 period.

The Finance Ministry suggests that this year’s recession will be shallower than forecast and that the economy will grow by 0.8% next year. The government will hope to capitalize on the signs of recovery and begin negotiations with the country’s international lenders on debt relief, perhaps involving another reduction of interest rates, and an extension of loan maturities.

Talks on the future of Greece’s debt and the effort to make it viable by 2020 are expected to begin sooner rather than later, now that the German general election is over.

“We should not stop exercising pressure for the agreed reforms to be carried out,” said Angela Merkel after a major election win for her CDU party on Sunday.

With Greece estimated to need an extra EUR 4.4 billion from its creditors next year and EUR 6.5 billion in 2015, the issue of debt relief will undoubtedly be put forth by Prime Minister Antonis Samaras. This financing gap will be the focus of the third stage of inspections carried out by the troika in November and December.

The leader of the German Social Democrats, Peer Steinbrueck, who is likely to be Merkel’s junior coalition partner in the new government, said Monday that the handling of the Greek debt issue will play a large part in negotiations between the CDU and SPD over a possible coalition.