ECB Denies Backing Reduction of Greece’s Primary Surplus Targets


A Greek central banker said the European Central Bank (ECB) expressed support for Greece’s efforts to reduce its target for a primary budget surplus after 2018. He said that the central bank supports the initiative of lowering the primary surplus to less than 3.5 percent of the country’s Gross Domestic Product. Athens has repeatedly asked its EU partners to lower primary surplus targets as well as grant the country debt relief so that growth could be boosted.

The same source said that the ECB backed the lowering of the primary surplus to 1.5 to 2 percent beyond 2018, however, it is up to the Eurogroup of the Eurozone’s finance ministers to decide.

The same official, who declined to be named, predicted that Greece would have a primary budget surplus of 0.8 percent in 2016 though Greece’s own central bank said in July that the primary surplus would be at 1.3 percent of the GDP.

No sooner were these comments made, that an ECB official denied that it was correct to say that the ECB supported the lowering of Greece’s fiscal targets. There first needs to be a discussion among the four institutions and the Eurogroup within the framework of the Eurogroup statement of May 24. What is important for the ECB now is that Greece delivers on its commitments under the program.”

The terms of the third bailout want Greece to achieve a 0.5-percent primary surplus this year and a surplus of 3.5 percent of the GDP in 2018 despite arguments by the International Monetary Fund (IMF) that claim that such targets are not feasible.