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Yiannis Stournaras, governor of the Bank of
Greece, said the country was likely to achieve a budget surplus,
excluding debt servicing costs, of 2.9 percent of gross domestic
product, undershooting a 3.5 percent target set by lenders.
Stournaras was speaking at an investment conference in Athens.
Greece's leftist Syriza administration introduced a bonus to
pensioners and tax cuts last month, days before European
Parliament elections which the party went on to lose to the
conservative opposition New Democracy. That defeat prompted
Prime Minister Alexis Tsipras to call a snap election for July
7, four months before the end of his term.
Any spending spree or slowdown in economic reforms is closely
monitored by Greece's lenders. The country signed up to three
bailouts worth more than 280 billion euros since 2010 in
exchange for unpopular austerity measures and reforms.
The European Commission said on June 5 that the tax cuts and
handouts to pensioners risked undermining the fiscal targets.
Greece wrapped up its last economic adjustment program last
year, but remains under financial surveillance to ensure it
meets its fiscal targets.
That includes ensuring the primary surplus should be at a
consistent 3.5 percent of GDP each year until 2022, falling to
2.2 percent thereafter. The 3.5 percent target should be
reviewed, and reduced in agreement with lenders, Stournaras
said.
"Maintaining high primary surpluses has an adverse affect on GDP
growth," he said.
(Reporting by George Georgiopoulos; Writing by Michele Kambas;
Editing by Peter Graff)
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