EZ official warns that Greek GDP forecasts in danger if review negotiations drag on

By N. Bellos
[email protected]

The specter of "revised" forecasts, downwards, for Greek GDP growth in 2017, and commensurate measures to ensure that fiscal targets are met, was cited by a top Eurozone official late Tuesday evening in Brussels.

The statement-cum warning came as a trio of Greek ministers completed a last-ditch round of negotiations with top Eurozone leaders in the Belgian capital, days before an "unofficial deadline" for concluding a staff-level agreement by a Eurogroup meeting on Friday in Malta.

Eurogroup chairman Jeroen Dijsselbloem chaired the meeting with Greece's finance, alternate finance and labor ministers, as other EU officials on hand were Commissioner Pierre Moscovici, ESM Managing Director Klaus Regling and ECB board member Benoit Coeuré. The European side was also in contact with the IMF's representatives, as the Fund has long emerged as the "strictest" party vis-a-vis the Greek program.

The unnamed official repeated that delays in concluding the second review of the Greek program is due to "political reasons", an obstacle to agreeing on a latest round of pension cuts and tax changes.

The gist of the statement was that if negotiations for a review continue to drag on, then the recession-plagued Greek economy will suffer, with consumers' and investors' confidence sliding, among others. As a result, economic forecasts for growth of up to 2.7 percent of GDP in 2017 will be revised downwards, meaning that fulfilling fiscal targets based on higher GDP forecasts will also appear fleeting. The final "domino to fall", under such a negative scenario, will be more austerity measures in order to reach standing fiscal targets.

What appears more-or-less certain, at present, is that a staff-level agreement will not be achieved by Friday, which is the current "unofficial deadline" for concluding the agreement.