The Government and the Bank of Greece estimate a diminished surplus

The Government and the Bank of Greece estimate a diminished surplus

The economy has become a worrying issue for the Government, as it considers that the evolution of the budgetary aggregates causes a deviation from the primary surplus of 3.5% that has to be reached.

It is indicative that during its first week, the Government has convened two financial staff meetings at the Maximos Mansion – the second one will be held on Saturday – while on Friday it met with the Governor of the Bank of Greece, Yannis Stournaras. Mr. Stournaras did not conceal his joy and satisfaction for entering Maximos Mansion for the first time in 3.5 years – Alexis Tsipras had not invited him – as well as for the fact that he shares a common understanding on the financial matters with the Prime Minister and the Economic Staff, announcing their cooperation from now on, as the Bank of Greece has been an aider and advisor for the Government. Mr. Stournaras said that the Bank of Greece’s estimate is that the primary surplus this year will be 2.9%, down by 0.6% from the target, and that corrective moves should be made in consultation with the European institutions. He said, however, that cutbacks will be introduced if necessary, as the gap could be covered by growth. Mr. Stournaras is of the opinion that if the Government speeds up the process of reforms, and especially privatizations, then it can achieve a better growth rate by the end of the year. However, the Prime Minister has given a general direction to the ministry leaders to review expenditure. Both the Government and the Governor agree that reforms will bring growth as well as provide greater fiscal space for the Government to implement its policy. Mr. Stournaras also agrees with Kyriakos Mitsotakis on the estimation that as the Government moves rapidly towards privatizations and reforms, in the next year it will be able to renegotiate the objectives of surpluses. They expect that for the time being, their European partners and officials will hold a tough stance and insist on Greece meeting the targets. The Government will soon abolish capital controls to the extent that restrictions still exist, while implementing a combination of the two proposals by the Bank of Greece and the Financial Stability Fund to regulate red loans.

Finally, although the Prime Minister has commenced his visits to the Ministry of Education for symbolic reasons, in order to emphasize that public education of high quality constitutes his own personal priority, nevertheless the bill that has been prepared and will be submitted first will be the one on taxation, which includes the Government’s key commitments for tax cuts, that will be valid starting 2020./ibna