September 13, 2016 / 3:32 PM / 3 years ago

UPDATE 2-ECB says incorrect to say that central bank backs lower fiscal target for Greece

(Releads with ECB official, adds details)

By Lefteris Papadimas

ATHENS, Sept 13 (Reuters) - The European Central Bank does not support a lower fiscal target for Greece after 2018, an ECB official said on Tuesday, commenting on remarks made by a Greek central bank official earlier in the day.

Greece has agreed to achieve a primary surplus - which excludes the cost of servicing debt - of 3.5 percent of gross domestic product in 2018. It wants to reduce its bailout target to 2.5 percent in 2019 and 2 percent in 2020.

The Greek official told reporters earlier that “the ECB is 100 percent with us ... but it’s up to the Eurogroup to decide”.

The ECB official responded: “It is not correct to say that the ECB supports a lower fiscal target for Greece after 2018.”

“There first needs to be a discussion among the four institutions and the Eurogroup within the framework of the Eurogroup statement of 24/5,” the official said referring to the ECB, the European Commission, the International Monetary Fund and the European Stability Mechanism.

Under the terms of its third international bailout, Athens needs to achieve a primary surplus of 0.5 percent of GDP in 2017. But it says that retaining high surpluses in the medium and long term is unrealistic, echoing the IMF on this issue.

Prime Minister Alexis Tsipras has also said that a lower target will give help boost growth and give Athens fiscal room allowing it to ease the austerity that has squeezed Greek households for six years.

Greece’s European lenders, however, have urged Athens to stick to the terms of the bailout and speed up reforms instead.

“What is important for the ECB now is that Greece delivers on its commitments under the programme,” the ECB official said.

Greece’s foreign creditors began assessing on Monday the country’s progress on reforms prescribed in its international bailout program, a key step before releasing 2.8 billion euro {$3.15 billion) in additional financial aid.

The government had promised to take measures to liberalise its energy market, cut pension spending, speed up privatisations and improve banking governance in exchange for the fresh funds, which will be used to pay off state arrears.

Additional reporting by Renee Maltezou; Editing by Alison Williams

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