Next 100 days crucial for post-bailout Greek finances, economy

Tuesday, 13 March 2018 09:47
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By T. Tsiros

The IMF and European creditors are again reportedly at odds over the Greek program, months before the third bailout is expected to be concluded in August, with the former favoring implementation of already agreed to austerity measures in 2019, rather than 2020.

Nevertheless, whatever final decisions will have to wait for June, when creditors will have conclusive figures over the height of the previous year's primary budget surplus, as a percentage of GDP, and the course of the Greek economy in 2018.

Greece's independent statistical authority, EL.STAT, is due to unveil its forecast for the 2017 primary budget figure on April 23, followed by a Eurogroup meeting in Sofia, while the GDP growth rate for the first quarter 2018 will be announced on June 4.

Therefore, all three sides - the IMF, European creditors and the poll-trailing Greek coalition government - will have to agree on open issues until a June 21 Eurogroup meeting.

Creditors' top auditors will return to Athens in early May - after Easter - to conclude negotiations over 88 "prior actions" that must be implemented as part of the fourth review of the ongoing bailout.

 ECB-mandated "stress tests" of Greek banks will conclude on May 5, while on May 24 the Eurogroup will convene to consider a compliance report regarding the fulfilment of prior actions.

If all goes according to plan, negotiations will then begin over more medium-term debt relief for Greece, deciding on how to use loan money that has not been disbursed by the ESM as part of the third adjustment program, as well as the politically sensitive issue of continued supervision by creditors after the third bailout ends in August.

On the "tactical" side, the Tsipras government apparently has the EU Commission on its side in trying to prevent the stepped up implementation of a lower annual tax-free income tax threshold, which is scheduled to come on line in 2020. The coalition government also wants to activate, with creditors' approval, a countervailing package of measures in 2019, when a general election is scheduled.

Brussels forecasts that the primary budget surplus for 2017 will hover at the 3-percent of GDP mark, whereas Athens has even cited a figure of 3.5 percent of GDP, as recently reported by "N", and despite a one-off welfare outlay of 1.4 billion euros to lower-income households last December.

Conversely, the IMF stands by its forecast that Greece's primary budget surplus for 2019 and afterwards will not exceed 1.5 percent of GDP. Therefore, the DC-based Fund wants to bring up austerity measures, including further pension cuts that the Tsipras government has already agreed to, and to bypass the countervailing measures in 2019.




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