The Economist backs calls for Greek primary surplus targets to be lowered

The Economist backs calls for Greek primary surplus targets to be lowered

The Economist magazine has called on Greece’s creditors to “stop pretending and settle Greece’s finances once and for all”. In an article that has been picked up by all major Greek media outlets, the UK magazine argues that “a new grand bargain is required”, now that “new prime minister, Kyriakos Mitsotakis, is trying to get Greece back on its feet”.

Most notably, according to The Economist, it is unrealistic to demand the Greek economy delivers on 3.5% primary surplus targets. It also backs calls by the IMF to finally offer proper debt relief to Greece, since the country’s economy is still squeezed and in need of fiscal easing.

The magazine comments that Greece’s bailout deal “was designed to look tough in order to be palatable to electorates in the north of Europe, who hate the idea of bailing out southerners, but experts agree that it is wildly unrealistic”.

The publication comes as news broke out earlier this week of a fiscal gap in Greece’s 2020 budget, which is likely to lead to hamper efforts by the Mitsotakis administration to push through some of his planned tax cuts.

A fiscal gap forecast was confirmed by a senior Eurozone official, who added that an agreement between Athens and European institutions before 15 October to cover the predicted shortfall is preferable.

According to the same official, the Greek issue will not be discussed at the 9 October Eurogroup meeting. However, a recent Euro Working Group examined the matter initially, based on an interim review by creditors. Although the evaluation was positive, a fiscal gap of roughly one billion euros for 2020 has reportedly been forecast./ibna