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Greece’s 2016 primary surplus at 3.9% of output: Data

The euro zone says Greece can deliver a primary surplus of 3.5 percent of gross domestic product (GDP) in 2018 but the IMF has said only 1.5 percent is feasible. (Reuters)
ATHENS: Greece in 2016 registered a primary surplus of 3.9 percent of output, the statistics agency said Friday, in a key announcement for the country’s reform talks with its creditors.
Under the bailout, Greece needed to clock a primary surplus — or budget surplus before debt repayments — of 0.5 percent of output in 2016, followed by 1.75 percent this year and 3.5 percent in 2018.
However, the state statistics agency insisted that the figures, although in line with EU guidelines, were not strictly comparable as they were calculated differently.
The statistics agency did not release a bailout-related surplus figure on Friday, and the agency did not respond to calls.
Dimitris Tzanakopoulos, a government spokesman, later said the actual bailout-appropriate figure was 4.19 percent, an increase of over eight times the target.
Hours before the figures were released, Greek Prime Minister Alexis Tsipras said in an article published in the Wall Street Journal that the economy had once again “overperformed.”
The announcement came as Greek officials aim to reach agreement on reform goals with the creditors in talks resuming next week.
In its announcement, the Greek statistics agency said the debt stood at nearly €315 billion ($338 billion) or 179 percent of output, up from 177.4 percent in 2015.
Euro zone nations including Germany want the International Monetary Fund (IMF) to retain a central role in supervising Greek reforms, but the global lender says it will only do so if it is satisfied that estimates of Greek recovery are not over-optimistic.
The euro zone says Greece can deliver a primary surplus of 3.5 percent of gross domestic product (GDP) in 2018 but the IMF has said only 1.5 percent is feasible.
In his Wall Street Journal article, Tsipras wrote that the EU-IMF squabble was holding back Greek recovery.
“We have committed to fulfilling the obligations undertaken to our creditors despite the political cost,” Tsipras said.
“But the safest way to ensure this is by boosting growth and ending the punishing policies of the past,” he said.
In a report on Wednesday, the IMF estimated the Greek 2016 primary surplus at 3.3 percent, noting that it did not have final figures for a definitive result.
Vitor Gaspar, the IMF’s fiscal affairs department director, acknowledged that the figure was “significantly stronger” than the agency’s prior forecast, but attributed it to “temporary factors.”
Critics note that the government secured the result partly by holding back over €3 billion owed to state providers.
In Athens, the government noted that just a few months earlier the IMF had predicted a primary surplus of 0.1 percent for 2016.
The IMF has consistently argued that Greece will need significant cuts to be able to reach a primary surplus of 3.5 percent in 2018.
“The IMF sees a primary surplus of 1.5 percent as an appropriate level to be sustained over the medium to long run,” Gaspar had told reporters on Wednesday.
But the Greek government insisted that based on the performance of the economy, which it says the Washington-based lender has consistently failed to gauge accurately, there will be no need for additional measures in 2018.
“Targets for 2017 and 2018 will be attained,” Tzanakopoulos said on Friday. “The 2016 result leaves no doubt on that.”
A compromise is required to sign off on a second review of the bailout program and unblock a tranche of loans Greece needs for debt repayments of €7 billion this summer.
The review is expected to resume next week.

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