Greece calls for two more years to reach a balanced budget

Aug. 16, 2012 - PRLog -- 8.16.2012
4:15pm Eastern Time

(Translated from Greek Newspapers)
Antonis Samaras is getting ready for a month-end loaded. On August 24, Greek Prime Minister will hold talks with German Chancellor Angela Merkel. The next day he will be received in Paris by Francois Hollande. Previously, Antonis Samaras is expected to meet Aug. 22 in Athens with the leader of the eurozone, Jean-Claude Juncker. This calendar congestion is not a coincidence. Greece calls for two more years to reach a balanced budget . In other words, Athens proposes to reduce its deficit to zero in 2016 and not 2014.

Not surprisingly, Germany has already objected to this request. However, it seems economically justified. The Greek economy is in poor condition. The contraction in GDP could reach 7% this year . This is the fifth consecutive year of recession. 7% is also the level of Greek public deficit. 2.4 percentage point higher than what was planned. Under these conditions, it seems illusory to schedule a return to balanced budgets in 2014. Angela Merkel will therefore probably negotiate a relaxation with Antonis Samaras.

The problem for Europe is that if Greece's fiscal adjustment delays, claims it has on this country will be repaid more slowly. Eventually, certain claims will perhaps not reimbursed at all, as the economic situation in Greece is bad. This is certainly the fear of some economists. "We had a plan for debt swap with private creditors . sooner or later we will have a debt-swap plan with creditors, "explained one of them before the summer holidays. "Greece can not repay its debts: it will spread the repayments considerably and may erase some of the slate," explained another.

We're not there yet. Greece has not yet pleaded his cause with European leaders. But in the proposal it intends to do with European leaders, Greece wants to push 2020 against 2016, the early repayment of the first loan made by Europe and the IMF, amounting to 110 billion euros. And some experts in Brussels doubt already have the ability of Greece to reduce its public deficit. Even with an additional two years.

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