Greece reaches milestone, opens way for assistance
BRUSSELS (AP) — Greece has reached a major financial milestone that its creditors demanded as a precondition for being granted more debt relief, the European Commission said Wednesday.
Additional help from its bailout creditors would help the crisis-stricken country as it seeks to overcome a protracted recession and tackle rampant unemployment.
Greece's government revenues last year exceeded expenditure when interest payment and other items were excluded, thus achieving a so-called primary budget surplus, a spokesman for the EU's executive Commission said.
Simon O'Connor said the surplus of 1.5 billion euros ($2.1 billion), or 0.8 percent of its annual gross domestic product is "well ahead of the 2013 target which was for a balanced budget" and showing Greece is on the right track to heal its finances.
Greece's international creditors have said a primary surplus will entitle Greece to further debt relief. Discussions on those measures are set to be concluded in the second half of the year, O'Connor added.
Most governments in the 18-nation eurozone are opposed to outright forgiving any of Greece's debt and are instead though to be offering to further lower interest rates on the country's rescue loans and extend again the date by which they have to be repaid.
"The Greek people's sacrifices are starting to pay off," Greek Deputy Finance Minister Christos Staikouras told journalists in Athens. "After these years, that were very tough on households and businesses, the country and its economy are in a definitely better position."
Four years ago, Greece became the first country in the eurozone to be bailed out after the country got locked out of international bond markets and faced imminent bankruptcy. The country is in its sixth year of recession and the unemployment rate is stuck at around 27 percent.
According to EU figures published Wednesday, Greece's budget deficit rose from 8.9 percent in 2012 to 12.7 percent last year, mostly due to a one-off payment to support the country's banks. Its total debt burden also increased from 157 percent to 175 percent of GDP, partly because the economy continued to contract.
Many analysts argue that a debt burden above 120 percent of GDP is unsustainable for a small economy like Greece.
The bailout program Athens concluded with the International Monetary Fund, the European Central Bank and the European Commission, also foresees a gradual reduction of its debt over the coming years — with the goal of reaching the 120 percent target early in the next decade.
The Greek government says the primary surplus serves as proof of its seriousness, since it even exceeded the agreed target. Athens therefore hopes it will be granted more leeway on other targets by its so-called troika of creditors.
The lenders say Greece must continue to implement an ambitious program of economic reforms to improve the country's competitiveness and lay the foundations for future growth. Greece has also pledged to significantly increase its primary surplus target to 3 percent of GDP by next year.
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Elena Becatoros and Nicholas Paphitis in Athens contributed reporting.
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