Greece’s creditors are placing emphasis on the coverage of the fiscal gap

Greece’s creditors are placing emphasis on the coverage of the fiscal gap not only of 2016 but also of 2017 and 2018, ahead of the first review of the bailout program. The measures required for that constitute the main sticking point in negotiations.

Officials say that the new measures that should be adopted amount to some 3 percent of the country’s gross domestic product (of which 1 percent is for this year), for the target of a primary budget surplus of 3.5 percent of GDP to be attained in 2018.

Sources say that the creditors estimate the fiscal gap for this year to range between 0.5 and 1 percent of GDP (0.9-1.8 billion euros). This is the amount that the government has to cover through new measures this year, not including the fiscal impact of the changes to the social security system.

The International Monetary Fund has the strictest position of all the creditors, which also include the European Central Bank and the European Commission, as it expects the gap to come to 1 percent of GDP this year and total 3 percent (about 5.5 billion euros) by end-2018.

A number of officials have opted not to voice their opinion at this stage, saying it is too early for any assessments, as the real and in-depth discussion will begin with the arrival of the representatives of the creditors in Athens, scheduled for next Monday, January 18.

This is why this Thursday’s Eurogroup meeting in Brussels will discuss Greece in a general nature, as the eurozone finance ministers will not be able to assess the Greek proposal on the pension reform before the representatives of the creditors have done so.

Officials from the creditors’ side say that the target of both sides is for the overall negotiation to be completed by the end of February. However, the estimate by a number of officials is that the talks on the pension reform and the first bailout review in general will occupy the representatives for the next few months, with some of them speaking of results coming by this spring if not by this summer.