Creditors open to adjustments to the bailout program

A window for limited changes to the new bailout program will open in the context of the country’s first assessment, starting in October, according to the country’s creditors and Finance Ministry officials.

This opening comes thanks to the economy’s better-than-expected performance, but everything will depend on how rapidly the next government is formed and its intentions regarding the immediate application of the agreed measures.

European Central Bank Executive Board member Benoit Coeure stated on Friday that there could be some scope for changes even on issues such as the labor market, but only if the general targets of the program are met and confidence in Greece is restored.

When the new bailout agreement was drafted, Athens and its creditors had agreed on an estimate for an economic contraction of 2.3 percent for this year and 1.3 percent in 2016. However, Finance Ministry officials told Kathimerini that this forecast may well be revised for the better during the first assessment of the program’s application, as economic conditions are proving better than anticipated.

Although the ministry has not yet worked on a new macroeconomic projection to update the existing one, officials are assuming that this will happen during the October assessment, which will not be a simple inspection of the implementation of measures but will also concern changes to targets.

The apparent improvement in the country’s economic prospects also creates some freedom for flexibility on the fiscal front. Of course the creditors will not accept any failure to implement fiscal measures, mainly structural ones, but they appear willing to examine any interventions aimed at helping growth where that is possible. For instance, the expenditure of the Public Investments Program could be strengthened in order to further bolster the prospects of an economic recovery in Greece.