Bank of Greece Governor Yannis Stournaras on Wednesday disputed the Finance Ministry’s projection that there will be an overrun in the year’s primary fiscal budget, and expressed his clear opposition to the handouts the government passed on the same day through Parliament and intends to continue introducing.
Speaking to the state-run Athens-Macedonian News Agency, the central banker went on to associate the unrest on the bond markets and the pressure on Greek securities in the last few days with the government measures, due to the concerns they are generating among investors.
Sources say Stournaras’ estimates rely on the cash figures of the Bank of Greece for the general government in the first quarter of the year. They show that the primary surplus is considerably lower than last year’s and will not meet the target of 3.5 percent of gross domestic product.
“This means that if this trend created since the start of the year is not reversed, there will be no fiscal leeway this year for additional handouts to those already included in the 2019 budget,” stated Stournaras. He added that “the jitters in the bond market in recent days reflect to an extent the concern of investors over fiscal developments.”
The central banker further warned that “failing to meet the target for a primary surplus of 3.5 percent of GDP will lead to the imposition of new measures, such as cutting expenditure and reducing the Public Investments Program,” which will have negative consequences on the growth rate of the economy. The Bank of Greece projects growth at 1.9 percent this year, against the 2.3 percent forecast by the government.
Finance Minister Euclid Tsakalotos offered an ironic response to the central banker’s warnings, tweeting that, “today, by mistake, Mr Stournaras reads the budget from his time as finance minister, when he had some difficulty in meeting targets. I am certain that if he looks into our budget and our financial indexes he will realize that the necessary fiscal leeway exists.” Stournaras was finance minister from 2012 to 2014.