Ahead of what promises to be a very tense negotiation period, the Greek Ministry of Finance released the preliminary budget execution data for the first three months of 2015. The state primary budget is reported to considerably exceed expectations, due to both expenditures below target and revenues picking up.
The coming month promises to be very tense for Greece. Negotiations seem to be proceeding slowly and payment deadlines are approaching fast. The euro group is due to meet later this week to discuss the Greek reform list that will be the basis for the final program review and that must be agreed upon by the end of April, according to the terms of the February 20 agreement, Silvia Merler wrote for Business Spectator.
Agreeing on a reform list is paramount for Greece to be able to unlock some of the frozen funding of the program and relieve the cash issues. However, EU policymakers sound increasingly skeptical about the possibility that a deal can be reached on that date.
No Solution?
Germany’s Finance Minister Wolfgang Schauble reportedly said “nobody expects there will be a solution”, while European Commission vice-president Valdis Dombrovskis also ruled out an agreement and said the meeting is most likely going to be just an assessment of the progress in talks with Greece. If no agreement is reached, then the discussion would shift to May 11, just ahead of a €750 million ($806m) repayment due to the IMF on May 12.
Against this background, the Greek Finance Ministry recently posted the preliminary budget execution data for the period January-March 2015. The release is important to assess because the fiscal performance will certainly be scrutinized and it could strengthen or weaken the Greek position in negotiations.
At first sight, the data is extremely positive. The state budget balance for the period January - March of 2015 presented a deficit of €500m against a target deficit of €2.1b, and in line with the figure reported last year (€448m for the first three months of 2014). The state budget primary balance recorded a surplus of €1.7bn, against a target of €119 million. This continues the improvement of the primary budget underperformance that was recorded in January and partially corrected in February.
