Dismissing burgeoning black holes in the economy because of setbacks in privatization and debt in the state health insurer EOPYY that could add up to more than two billion euros ($2.6 billion) Greek Finance Minister Yannis Stournaras said his only goal is to create a primary surplus by the end of the year, whatever it takes. He didn’t say if that means Greece will stop paying its bills again.
In an interview with the newspaper Kathimerini, he refused to talk about fiscal problems or Germany’s rejection of any notion that Greece will impose losses on public investors – of which Berlin is the biggest – as it did with private investors two years ago, and said his only concern is producing statistics that will satisfy international lenders and keep their money coming.
With German Chancellor Angela Merkel facing re-election with her party in elections in September, Greece is anxious to keep good relations while Germany wants to hold down any social unrest, which is building again in Greece after the government said it would fire as many as 27,500 workers over the next two years to satisfy its lenders – including Germany.
He has to tread carefully with Germany as the newspaper also reported that Merkel recently suggested to a Greek official that Athens should not keep referring to another debt writedown as it could wind up “regretting” it.
Stournaras said that, “The Eurogroup’s existing decision (on debt reduction) requires there to be a general government primary surplus,” he said. ”When we achieve this, then the issue of debt reduction can be discussed.”
The Finance Ministry announced that the primary deficit stood at 1.5 billion euros ($1.96 billion) for the first half of the year, down from 3.3 billion euros ($4.31 billion) during the same period in 2012.
Stournaras insisted that, contrary to reports, there was no 2-billion-euro shortfall for this year and next. He said that some missed targets were being made up by better performances elsewhere and that the government was moving forward the implementation of some measures it had planned for the beginning of next year, such as a luxury tax.
“It is extremely important that for a second successive troika review, there will be no wage or pension cuts,” he said. “This means the budget execution has stabilized and we are within our targets. No country in the world executes the budget exactly as it is voted through Parliament.”
Stournaras also said the Finance Ministry estimates that the fiscal gap for 2015 and 2016 will be smaller than the 2 percent of GDP that the troika predicts. “Whatever the fiscal gap is, it can be covered without any new measures affecting wages, pensions or taxes,” he said. “The emphasis will be on reforms that reduce the cost to the state without affecting the quality of public services.”
Another issue that has been discussed over the past few days is the funding gap that will appear when Greece’s bailout ends next summer. It is estimated that Greece could need another 10 to 15 billion euros from its lenders. Stournaras suggested that they would stick by Greece if it continues implementing its adjustment program.
“Until July 2014, there is no problem,” he said. “For the remainder, I am sure that our partners will stick to their commitments regarding financing, as long as we keep to ours.”
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