How the EC report changes the negotiation terms with the Troika

Yannis Stournaras found an unexpected ally in the report for the autumn forecast of the European Commission in order to avoid pressure from lenders for additional measures in 2014. While discussing with the Troika auditors, deputy minister Christos Staikouras was briefed on his mobile phone about the contents of the report presented in Brussels, by Commissioner Rehn. On page 150 of the report, the analysts of the European Commission say that the primary surplus in 2014 in Greece will reach 2.8% of GDP, while in April, they predicted a surplus of only 1.8%.

'Why do you push us by increasing the budgetary gap of 2014 to 3.2 billion euros, since you acknowledge that things will go better than you expected a few months ago?’ the Deputy FinMin asked the European Commission representative, Mathias Morse. Reportedly, the Troika mission did not know until that moment the predictions of the Economic and Financial Affairs Directorate General.

For a short period there was embarrassment in the room until the governor of Brussels said some possible or improbable interpretations that this analysis teams might have incorporated in their calculation the yields of Greek bonds held by central banks.

Monitoring the performance of the Greek economy

The auditors will show their true intentions in a new meeting with the economic team at the end of the week, when Klaus Masuch will return, as he has assumed the "role of the bad guy."

Soon as the Troika auditors returned to Athens they focused on numbers and measures. The Greek side entered the new negotiation with the new economic data showing that the creation of a primary surplus this year is feasible.

According to a member of the Finance Ministry, the auditors accepted to consider whether this performance could be continued in 2014 in order to require fewer measures.

The spring forecasts of the European Commission

According to the economic forecasts of the European Commission the recession is expected to fall to 4% in 2013 from 6.4% in 2012, while Greek economy is projected to recover in 2014 at 0.6% and consolidate to 2.9% in 2015.

In its spring forecasts in May, the Commission estimated a 4.2% decline in 2013 and a rebound at 0.6% in 2014.

The fiscal deficit is expected to reach 13.5% in 2013 (due to the recapitalization of banks) and be reduced to 2% in 2014 and 1.1% in 2015.

The public debt is estimated that from 156.9% in 2012 will increas to 176.2% in 2013 decline to 175.9% in 2014 and 170.9% in 2015.

Finally, according to the same forecasts there will be a -0.8% deflation in 2013 and -0.4% in 2014, while for 2015 it is expected to reach 0.3%.

 
Staikouras: 24% increase in revenues for October

Deputy Finance Minister Christos Staikouras announced an increase of 24% against the target in revenues before the budget tax refunds of the general government in October.

According to the announcement, the budget implementation data in the first nine months of the year, reinforce the view that 2013 will close with a primary surplus. Indeed, in October revenues went far better than the set targets, since before tax refunds they amounted to 4.8 billion euros, increased by 750 million or 24% compared to the monthly target.

"The surpass of the target is observed for the fourth consecutive month. As a result, at a 10-month-level, tax revenues move higher than their goals,’ the statement read, and that by the painful contribution of households and businesses, Greece is approaching its fiscal targets.