The Eurozone Finance ministers are expected to deliberate, in the aftermath of Brexit, on the economic growth possibilities as well as the condition of the markets based on a presentation which to be presented by the ECB and the Commission.
According to a senior official, Brussels do not intend to talk on the Greek issue until September. Sources from the Commission assured that, for the time being there is no “important delay” in the application of the prior actions which are programmed to unlock the 2.8bn sub-tranche.
Even though Greece will not be the topic of discussion at Monday’s Eurogroup, Finance Minister Euclid Tsakalotos heads to Brussels with the aim of changing and lowering the budgetary surplus targets Athens has to meet after 2018. Currently, Athens has to achieve a 3.5% of GDP budgetary surplus which the government hopes to lower to 2.5% in the period stretching from 2019 to 2021 and down to 2% from 2022 onward.
Both sides, Greece and its creditors, present valid financial arguments on which path should be followed; however once again politics may be the game changer. Greece insists these targets will not compromise the sustainability of the country’s debt and wants the approval of the creditors as soon as possible so as to enshrine the figures in the midterm program for 2017-21.
Northern European countries such as Germany, Finland and others have expressed opposition to changes to budgetary targets, arguing that if Greece borrows from the markets after 2018 at a higher rate than the one predicted today, then the country’s debt will need further restructuring.
It should be noted that the September sub-tranche is dependent on dozens of strict prior actions concerning crucial changes in Greek labor legislation, mass redundancies and trade rules and restrictions. The Greek government wants the relaxation of budgetary surplus targets after 2018 in exchange.