(Greece) – Alexis Tsipras, the Prime Minister of Greece, has said that the country won’t be able to achieve its primary surplus targets after 2018 when its current bailout expires. Because of this, he is hoping to negotiate lower budget goals with international creditors.
Speaking with journalists, Tsipras said, “We guarantee that we are going to reach the [3.5% primary] surplus, even if we have to use the fiscal brake, but only once in 2018.” He made this statement while he was flying back to Greece after visiting China for several days in order to attract Chinese investments to Greece.
In the summer of 2015, Greece agreed to increase its primary surplus to 3.5% of the Gross Domestic Product by 2018 and also to maintain that in the medium term. However, Greece insists that after this time, it will be difficult to achieve this. Currently, there is a state legislature in place that will automatically cut state spending if the company misses its budget targets.
Tsipras has said that it is difficult reaching these targets. He said, “We are telling [the creditors]… come on let’s get serious and look at what is going to happen in the next decade and set a sensible target of 1.5% to 2%.” The International Monetary Fund agrees with Greece and agrees that they won’t be able to achieve surpluses of more than 1.5% for the foreseeable future.
However, the European Central Bank, European Commission, and European Stability Mechanism all disagree. They believe that the current requirements are perfectly reasonable. Some of the more pessimistic of Greece’s creditors even believe that a primary budget surplus of at least 3% is perfectly achievable from 2018 and into the 2020’s.
Greece’s debt crisis began to surface in 2009 and the country’s first bailout occurred in 2010. Since that time, Greece’s international creditors have said that the Greek government needs to reduce spending and increase revenue.