Greek handouts jeopardize budget target, says Stournaras

One day after Greece’s Parliament approved some 1 billion euros in pension handouts and other relief measures ahead of European and local elections next weekend, the country’s central bank governor warned that the package jeopardized the budget target agreed with foreign lenders.

In an interview with the Financial Times on Thursday, Bank of Greece Governor Yannis Stournaras said that budget figures of the first quarter indicated that Greece's primary surplus, excluding debt service costs, dropped by 0.5 percent of gross domestic product, when compared to the same period last year. The trend, he said, is set to continue as tax collection lost pace ahead of general elections scheduled for October.

“There is no fiscal space for handouts,” Stournaras told the FT. “The government is unlikely to collect taxes at the same pace as last year, while it will have to address this year a large body of further pension claims covering the crisis period,” he said.