Eurozone lenders estimate Greece had a primary surplus between 2 and 3 percent of its gross domestic product last year

Eurozone lenders estimate Greece had a primary surplus between 2 and 3 percent of its gross domestic product last year, much higher than the target set under its bailout program and more than previously forecast, an EU official told Reuters on Friday.

The size of Greece’s primary surplus – the budget balance before debt-servicing costs – is a source of contention between eurozone governments and the International Monetary Fund, which believes the surplus in 2016 was only 0.9 percent.

Better-than-expected figures could smooth bailout talks, which have been stalling for months on Greek pension and labor market reforms required by creditors in exchange for the disbursement of new loans to pay debt due in July.

Under Greece’s 86-billion-euro (69 billion pound) bailout program, the third since 2010, Athens was supposed to reach a primary surplus of 0.5 percent of GDP last year.

Last year’s primary surplus

The EU official said the Greek authorities estimate now that last year’s primary surplus will be “around 3.5 percent of GDP,” although the final figures will be known only in April. This would be already in line with Greece’s target for 2018, when the program ends.

“The Commission and the institutions are still assessing the data and have so far given a more cautious estimate of between 2 percent and 3 percent of GDP,” the official said, noting this would be “a massive overachievement.”

In its last economic forecasts released in February, the European Commission had estimated a primary surplus for 2016 of 2 percent.

The official also said the proceeds from Greek privatizations, including the port of Thessaloniki and Athens International Airport, were expected to reach 2.4 billion euros this year and 1.9 billions euros in 2018. The Greek government had expected revenues of 2.7 billion euros this year.

Pension reforms already enacted by the Greek government are also expected to generate savings of 1.5 percent of GDP by 2018 and 2.5 percent of GDP by 2025, the official said.

Source: Reuters

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