(Adds Dijsselbloem, government spokesman)
By Lefteris Papadimas and Francesco Guarascio
ATHENS Nov 29 Greece can meet its fiscal
targets next year, the head of the country's central bank said
on Tuesday as he warned that the biggest risk the economy faced
would be a failure to conclude the latest bailout review.
Athens and its official creditors are at odds over the
country's fiscal targets as well as labour and energy reforms
that are part of Greece's second bailout review.
Meanwhile, a rift between the European Union and the
International Monetary Fund over Greece's medium-term primary
surplus targets has also clouded Greek hopes for a swift
conclusion of the review.
"Despite the positive projections ... serious risks remain,"
Yannis Stournaras told a conference in Athens. "The main risk
would be the eventuality of failing to reach agreement on the
second bailout review and any delays in implementing the
programme or backtracking."
Greece's budget aims for a 2017 primary surplus - which
excludes debt servicing costs - of 2 percent of economic output,
slightly higher than the 1.75 percent bailout target.
In 2018, the bailout terms demand the surplus increase to
3.5 percent of output. Athens says it cannot maintain a surplus
at such levels beyond 2018.
Athens hopes to reach an initial deal with its lenders on
reforms this week and conclude the review by the end of the
year. A Eurogroup meeting of euro zone finance ministers on Dec.
5 will discuss Greece's progress and debt relief measures.
A second Eurogroup meeting may take place later next month,
Greek and EU officials have said. Greece's medium-term fiscal
targets and how long it can sustain them will also be on the
Greece's economy expanded for the second quarter in a row in
July-September, statistics service data showed on Tuesday,
boding well for a stronger recovery next year after a protracted
"NEED TO BE REALISTIC"
Stournaras said lowering Greece's primary surplus target to
2 percent of economic output from 3.5 percent after 2018 when
its financial aid programme ends would help boost growth.
On Monday, Finance Minister Euclid Tsakalotos suggested the
target be reduced to 2.5 percent of GDP. Athens would then be
able to offer tax relief for businesses to boost
The IMF says the bailout target of 3.5 percent of GDP is
unrealistic without debt relief and extra austerity measures.
European officials have said the target is feasible. But on
Tuesday, the chair of the Eurogroup of euro zone finance
ministers Jeroen Dijsselbloem said European lenders "need to be
realistic" over Greek fiscal targets after 2018.
Dijsselbloem told the European Parliament's economic affairs
committee that the IMF had a point when it says "running a
primary surplus of 3.5 percent for a very long time is a huge
thing to ask".
Greece's leftist-led government signed up to a new bailout
and more austerity in July last year, despite pre-election
pledges to ease belt-tigthening after seven years of crisis.
Greece says it cannot accept more austerity after 2018 and
wants to be included in the European Central Bank's quantitative
easing programme in the first quarter of 2017 to regain market
access by the end of that year. [nS8N18J009
"Greece cannot stand any more austerity after 2018,"
government spokesman Dimitris Tzanakopoulos told reporters.
(Additional reporting by George Georgiopoulos, Renee Maltezou,
Angeliki Koutantou; Editing by Richard Lough)