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Greece breezes past EU-IMF bailout targets with strong budget performance

Greece far exceeded its international lenders’ demands for budget savings last year, official data showed on Friday, outstripping even 2017’s target and presenting a strong case for unlocking more bailout funds.

Data released by Greek statistics service ELSTAT – to be confirmed on Monday by the European Union – showed the primary budget balance, which excludes debt servicing, hit a surplus of 3.9 per cent of gross domestic product last year versus a downwardly revised 2.3 per cent deficit in 2015.

This was calculated under European System of Accounts guidelines, which differs from that used by Greece‘s International Monetary Fund-European Union creditors in bailout deliberations.

But the IMF-EU number is expected to be even better.

A Greek government official told Reuters that last year’s primary budget surplus under the bailout programme reached “about 4 per cent, or slightly higher”.

That compares with a bailout surplus target of 0.5 per cent of GDP and with a primary budget surplus target of 1.75 per cent of GDP this year.

Debt-strapped Greece and its creditors have been at odds for months over the country’s fiscal performance, delaying the conclusion of a key bailout review which could unlock needed bailout funds.

The IMF, which has reservations on whether Greece can meet high primary surplus targets, has yet to decide if it will fund Greece‘s current bailout, which expires in 2018.

The 2016 outperformance could lead the fund to revise some of its projections. The IMF’s participation is seen as a condition for Germany to unlock new funds to Greece.

Athens hopes to discuss the fund’s participation and its projections at the sidelines of the IMF’s spring meetings in Washington.

Analysts attributed the outperformance to the implementation of bailout measures and increased efforts to improve the state’s revenue collection capacity.

“It’s an impressive outperformance versus the bailout programme target for the primary surplus,” said Athens-based Eurobank’s chief economist Platon Monokroussos.

“The data suggests that the 2017 fiscal target under the bailout programme is fully attainable under the current baseline macroeconomic scenario,” he said.

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