Athens eyes a lowered budget target

Athens views the proposal by European Stability Mechanism officials for an increase in the national debt ceiling from 60% to 100% of gross domestic product in the European Union positively, but its ideal target would be a primary budget surplus of just 1.5-2% of GDP in the coming years, according to a senior Finance Ministry source. That would allow Greece to cover the 150-billion-euro investment gap opened by the debt crisis.

Such a fiscal easing would translate into a significantly easier target than the obligations for a primary surplus of 2.2-2.6% of GDP after 2022. This obligation still stands despite Greece adding some 20 percentage points of GDP to its debt during the lockdowns.

Negotiations in the EU will evolve in the coming months, but in the best-case scenario Greece will not only have to have primary surpluses as of 2023, but also display sensible fiscal behavior in the long term. This is because another rule apparently securing universal acceptance is the obligation for a country to build up a cash buffer in better times to be able to handle later difficulties. Therefore any budget surpluses created will not be handed out but be used to create a safety cushion.