Greece is considering adopting measures proposed by EU institutions now and agreeing to implement additional reforms if it misses its 2018 bailout targets, in an effort to unlock new bailout loans, a government official said on Sunday.
Talks on the review of Greek reforms have dragged on for months partly because the International Monetary Fund and EU institutions cannot agree between themselves on some economic assumptions and scenarios of how the Greek economy might develop.
The European Commission, the European Central Bank and the European Stability Mechanism believe Athens can achieve a 3.5 percent of gross domestic product target for its primary surplus in 2018, if it takes measures to plug a 3 percent fiscal gap.
Greece, which is also at the forefront of Europe’s refugee crisis, has reached an accord with its EU lenders on the targets.
The IMF sees slow fiscal adjustment and expects the country to achieve a primary surplus – which excludes debt-servicing costs – of 1.5 of GDP in 2018. It has also urged Greece’s European peers to grant it substantial debt relief to make its debt sustainable.
“Among the various proposals brought forward for the lenders to reach a compromise is the one for extra measures that could be decided now but implemented only if we don’t meet our target for a 3.5 percent primary surplus in 2018,” the official said.
“The Greek government’s final decision will depend on the whole package, which will be put on the table and will include debt relief.”
Concluding the review swiftly is crucial for the left-led government, which has a fragile parliamentary majority and needs extra funds to pay debt obligations and unpaid state bills.
Greek government officials held talks with euro zone finance ministers and top IMF officials in Washington during the weekend over the progress of the review and the prospect of debt relief.
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