Greece Seeing Vast Improvement, But Remains Cautious

January 14, 2014 Taxation in Greece

ATHENS – While Greece is making noticeable progress towards an economic recovery, its international lenders need to scale back their demands and take a realistic view of the growth which can be achieved.

In a television interview on January 13th the Finance Minister of Greece Yannis Stournaras said that the country has nearly reached its fiscal and economic targets, including deficit reduction and debt repayment, and the government will continue to build upon this success in order to obtain further funding from loans and the international bond markets.

The Minister’s assessment of the country’s economic situation was based on new data released last week, showing that the national budget surplus over the first 11 months of 2013 was EUR 2.55 billion.

According to the Minister, in an effort to further improve the growth, Greece will continue to lower government expenditure, with a reduction target of EUR 1.2 billion set for the current year.

Yannis Stournaras also indicated that if the positive pace can be maintained over the first half of 2014, the government hopes to re-enter the international bond market for the first time since 2010.

International experts have noted that even with such obvious economic improvement, Greece still reliant on the possibility of obtaining further loans from the international society, and the growing surplus and the diminished expenses will be pivotal information when the International Monetary Fund, European Central Bank, and the European Commission in deciding whether to grant Greece a EUR 5.7 billion loan over the first three months of 2014.

However, the Finance Minister stated that the international lenders need to be realistic with their demands towards Greece, and while the government may continue to implement the reforms already underway, there is little political leeway to launch any new measures to raise tax revenues or reduce expenses any further.

The minister explained that the currently ruling party only holds a majority of three seats in the country’s 300 member parliament, meaning that its political leverage is very slim.

Photo by: Paul Wilkinson