Stournaras: Primary surplus is the goal

Producing a primary surplus by the end of the year remains Greece’s main economic target, Finance Minister Yannis Stournaras told Kathimerini in an interview, during which he brushed aside any concerns about a fiscal gap appearing this year or next.

Stournaras gave a carefully worded response to the question of whether Greece can expect another debt reduction following the German federal elections in September. Berlin has already reacted coolly to the idea and Kathimerini understands that German Chancellor Angela Merkel recently suggested to a Greek official that Athens should not keep referring to the matter because it may end up “regretting” it.

“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.”

On Wednesday, the Finance Ministry announced that the primary deficit stood at 1.5 billion euros for the first half of the year, down from 3.3 billion euros 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.”