Scenarios for measures and counter measures and the May decision

Scenarios for measures and counter measures and the May decision

The government’s financial staff and institutions will sit at the same table the coming May to assess the fiscal situation in 2019. In this debate, three scenarios are possible: To reach a common estimate of a primary surplus of 3.5% in 2019, so the 1% cuts in pensions and corresponding countermeasures will be applied. The second scenario is the surplus to be between 2.5% and 3.5%, so the same percentage of countermeasures will be cut and pension cuts will be applied. The third scenario includes an estimate of a primary surplus in the 1.5% -2.5% range, so the countermeasures will cease to apply while there will be a “flat rate” (up to 1% fiscal) reduction in the tax-free rate so as to achieve the necessary primary surplus, while there will of course be the projected reduction in pensions.

However, the government believes that there will be no issue, something which, as government spokesman Dimitris Tzanakopoulos said,  is based both on the good execution of the 2017 budget, which continues in 2018, as well as on the IMF stand, that has improved a lot with regard to its forecasts for the Greek economy, raising the surplus to 2.8%. It is a fact that the primary surplus reached 6.8 billions in 2017, indicating that there will be carryover this year, but also over time, while yesterday’s budget figures show twice the overrun of the primary surplus target in the first two months of 2018.

In any case, a competent source reported that the government is not worried about any decision the IMF has reached, adding that if it does not agree with the estimates of Europeans and Greeks, then it may not participate in the programme.

When will the IMF decide?

In the coming weeks, the role of the IMF in the Greek programme will be in focus. The issue will be examined at the spring meeting of the IMF on April 20-22, too which will take place in Washington. The course of the fourth assessment, the debt negotiations and the post-memorandum supervision will be talked over also at the Eurogroup on May 24.

At the end of the day, the fourth assessment, negotiations on the debt and the post-memorandum framework must be agreed on at the Eurozone Finance Ministers’ meeting on  June 21, in Luxembourg. Countdown has begun… / IBNA