Athens Digest 06.11.2018

• 2019 fiscal space is still under discussion, Centeno and Moscovici say

• Regling: Commitments should be respected or discussed with the institutions

• Francesco Drudi (ECB): Greek banks lagging behind European lenders in financing SMEs

• Payouts to pensioners only after successful legal challenges, says social security deputy minister

• Greece left off U.S. sanction list for Iran

# Greece took a backseat to Italy’s budget crisis at the latest Eurogroup meeting, but President Mario Centeno and Pierre Moscovici, the EU Finance Commissioner, said that the fiscal space of 2019 Greek budget is still under discussion. “The institutions are assessing how much fiscal space above and beyond the primary surplus target there is to use,” Centeno said. “We have to look at the magnitude of this fiscal space and then how it can be used,” Moscovici added.

# Klaus Regling, the ESM managing director, praised government’s commitment to 3.5 percent primary surpluses, but renewed caution on the pension debate. “There is the additional understanding that previous commitments under the programme should be respected or discussed with the institutions, and we are going through that process,” he said. (all statements on Greece here, time 10.45)

# The government has ruled out mass compensation payouts to pensioners after successful legal action taken by a group of retirees in Thessaloniki saw a court order the repayment of money from bailout-era cuts. Tassos Petropoulos, a social security deputy minister, said damages would only be paid to pensioners who made successful legal challenges. Experts have warned that major compensation payments could derail the government’s budget performance and undermine efforts to broaden spending on other social programmes.

# Improvements to the financial health of Greek banks remain behind those made elsewhere in the Eurozone, a senior ECB official has warned. “Greece is well behind the Eurozone in terms of financing small and medium-sized businesses,” Francesco Drudi, country coordinator for Greece at the European Central Bank, told a business conference in Athens. He urged banking leaders to redouble efforts to reduce the stock of non-performing loans and speed up online auctions.

# Speaking at the same event, Kathrin Muehlbronner, a senior Vice President at Moody’s said the ratings agency remained reserved about Greece’s growth potential given the lack of diversity in its economy, a relative lack of openess and worsening international conditions.

# Greece has been left off a list of countries included in tough United States sanctions against Iranian oil exports, along with China a six other nations. The measures and six-month waivers were announced by U.S. Secretary of State Mike Pompeo. Other countries in the waiver group were: South Korea, Japan, Taiwan, India, Italy and Turkey.

On our Radar: Greece establishes Energy Clearing House
ENEXClear S.A., the Energy Clearing House, was set up on November 2, as announced by the Hellenic Energy Exchange. The company will put in place all clearing and settlement arrangements until the go-live of the intraday and day-ahead markets. HENEX is the sole shareholder of the new entity. Prompted by its lenders to focus on the Target Model implementation, Greece has committed to launch, as of April 2019, operations of its energy exchange and be technically ready to couple its electricity market with those of Italy and Bulgaria.