European Stability Mechanism

By George Gilson

There will be room for changes to Greece's fiscal policy on the condition that targets are achieved, was the message reportedly conveyed by European Stability Mechanism (ESM) Managing Director Klaus Regling to Greece's new Finance Minister Christos Staikouras during their meeting Monday in Athens.

Finance Minister Christos Staikouras is to meet at the ministry on Monday at 3 p.m. with Klaus Regling, the managing director of the European Stability Mechanism (ESM).

Prime Minister Kyriakos Mitsotakis is having a meeting at his office with Finance Minister Christos Staikouras and his three deputies - Apostolos Vessyropoulos, Thodoros Skylakakis and George Zavvos - about the government policy statement to be made in Parliament next week and the new tax bill, which is expected to cut some income and indirect taxes, although probably not as much as the new gov

The head of the European Stability Mechanism (ESM), Klaus Regling, has left open the prospect of Greece not lowering its tax-free threshold as it agreed to with creditors, but Regling also signaled that the incoming Greek government's aim of lowering of primary surplus targets is at the moment hardly a sure thing.

Discussion on Greece was brief at Monday's Eurogroup, but the council of eurozone finance minsters sent a clear message to Athens that creditors are ready to cooperate with the new government while warning that the handouts announced in May by the previous administration are putting growth and fiscal targets at risk.

European Stability Mechanism chief Klaus Regling reiterated on Thursday the eurozone's doubts over Greece achieving a primary budget surplus equal to 3.5 percent of gross domestic product after the handouts recently voted by Parliament.

The European Stability Mechanism (ESM), Greece's chief creditor, in a regular report on the Greek economy has warned Athens to fully implement all reforms agreed to in the bailout memorandums, including a 3.5 percent of GDP primary surplus until 2022.

The report coincides with the Bank of Greece's announcement that it projects a 2.9 percent primary surplus for 2019.

Greece has made big progress in restoring sustainability to its public finances, strengthening the banking sector's resilience, and improving the economy's competitiveness last year but it needs to remain on track and adopt more growth-oriented policies, the European Stability Mechanism (ESM) said in its annual country report on Thursday.

Finance Minister Euclid Tsakalotos on Monday dismissed officials who have expressed concern over the government's handout policy ahead of the elections - including the head of the European Stability Mechanism, Klaus Regling - as "austerity supporters," although concerns are also being raised by others much closer to home, at the Parliamentary Budget Office (PBO).