2016 budget and the targets of the draft budget for 2017 discussed in Tsakalotos – institutions meeting

The execution of the Greek government’s 2016 budget and the targets of the draft budget for 2017 were the focus on Monday’s meeting between Finance Minister Euclid Tsakalotos, Alternate Finance Minister George Chouliarakis and the institutions representing Greece’s creditors.

A source that took part in the negotiations said the talks focused on whether Greece had achieved the fiscal targets for 2016 after Eurostat revised the figures for its 2015 primary surplus downward, from an initial forecast of 0.7 pct of GDP to just 0.2 pct of GDP. They also examined ways in which the forecasts for the 2017 budget might be met. According to the source, the creditors did not ask for additional measures, while the economic policy programme targets for the fiscal result in 2016 and 2017 were not at stake.

Among others, the issues examined were the impact of Eurostat’s downward revision on the fiscal targets for 2016. The two sides also discussed 400 million euros in national defence ministry spending cuts for the two-year period 2017-2018 and an increase in public revenues, which have out-performed targets by an estimated one billion euros, facilitating the finance ministry’s execution of the 2016 and 2017 budgets.

Official sources noted that, whatever happens, the finance ministry has a 400-million-euro ‘cushion’ in order to cover any further revisions. The finance ministry has the option of restricting the primary surplus target for 2017 to 1.75 pct of GDP, which is the target set by the economic programme, instead of the current 1.8 pct of GDP in the draft budget. This amounts to a saving of 140 million euros. It can also redirect 300 million euros earmarked for welfare, health and education in order to finance the Sofial Solidarity Income.