European Stability Mechanism (ESM) managing director Klaus Regling has repeated his warning that Greece’s is veering away from its fiscal targets following recent measures that Athens adopted without consulting the institutions, leaving the next government with some tough decisions to make.
The new Greek government formed after the July 7 elections is unlikely to have to face probing questions about its plans and this year’s fiscal targets from its eurozone counterparts until September.
Greece’s official creditors have recently expressed at various levels their concerns about whether the country will be able to meet its fiscal commitments after adopting a new batch of expansionary measures last month, so it was no surprise that this issue was explored extensively in the latest post-programme surveillance report published by the European Commission.
The European Commission issued on Wednesday its third report of the enhanced surveillance period, highlighting concerns about the fiscal impact of the government’s expansionary measures and noting a slowdown in reforms.
The European Commission is due to publish on Wednesday the third enhanced surveillance report, highlighting that recent fiscal interventions by the government have cast doubt over whether this year’s primary surplus target will be reached.
In its quarterly report published on Wednesday, Parliament’s Budget Office (PBO) does not share the concerns of the country’s lenders about the impact of the latest expansionary measures on fiscal targets.
There have been reports that the European Commission might not publish its third enhanced surveillance report next week, but it is certain that the issue of meeting this year’s fiscal targets will not disappear for the current Greek government or its successor.
There appears to have been keen interest in the schemes launched this week allowing taxpayers to settle their unpaid taxes and social security contributions in up to 120 instalments, possibly boosting the government’s efforts to convince the institutions that Greece will be able to meet its fiscal targets this year.
A new internal evaluation document published by the International Monetary Fund on Monday can be added to the existing material that has been released by the IMF on Greece outlining what a formidable task the country faced in 2010 when it signed the first programme with the eurozone and the Washington-based organisation.
Thursday’s Eurogroup resulted in a warning from European Stability Mechanism managing director Klaus Regling that Greece may miss its primary surplus target this year as a result of the so-called positive measures adopted.