Athens Digest 17.05.2019

• Lenders fear Greece straying off course after handout package announcement

• Primary surplus targets might not be reached by a significant margin, says Regling

• Centeno: Commitments must be respected

• Stournaras renews deficit warning 

• Anarchist groups step up attacks in support of terror group gunman

# Creditors expressed fears last night that Greece may be straying from commitments after rushing a handout package through parliament this week “We are worried about that,” ESM managing director Klaus Regling said after a Eurogroup meeting in Brussels. “Οur preliminary assessment indicates that with these measures, the primary surplus target of 3.5 percent this year might not be reached by a significant margin. And that would be more so next year ( ..). We are also worried about the composition of these budgetary measures, which are not growth-friendly in the medium and longer term,” he added. Regling noted that Greek bond spreads had risen amid international uncertainty and the announcements in Athens. On the early repayment to the IMF, he repeated that it could strengthen Greece’s debt sustainability but he warned: “We need waivers from the EFSF and ESM member states, and whether the recent announcements on fiscal measures have an impact on that assessment remains to be seen.”

# Mario Centenothe Eurogroup president, said Greece is expected to meet its commitments to lenders. “Greece has overachieved on fiscal targets so far, we expect the commitment with the Eurogroup to continue to be respected so that Greece continues to enjoy investors’ confidence in the future.” The told reporters that the Eurogroup will discuss the issue in June on the basis of the country’s third enhanced surveillance report.

# Yannis Stournaras has renewed a budget warning in the wake of government’s tax cuts and pension hikes approved this week. “The government is unlikely to collect taxes at the same pace as last year, while it will have to address this year a large body of further pension claims covering the crisis period,” the central bank governor told the Financial Times. “There is no fiscal space for handouts.” He warned that tax collection was likely to slow before the general election and that the government may be forced to take corrective measures before the end of the year.

On our Radar: Attacks Intensify
Anarchist groups have stepped up attacks and protests around Greece in support of hunger striker Dimitris Koufodinas, the terror group gunman demanding prison leave. Demonstrators forced their way into state radio studios in northern Greece and a protest note was read out on the air. Near Athens, youths smashed the entrance of suburban offices of New Democracy. And small homemade bomb explosions damaged a bank in Athens and a Europe Direct EU information office in Thessaloniki. Members of the anarchist group Rubicon on Wednesday attacked the home of US ambassador Geoffrey Pyatt, throwing bottles filled with black paint at the outer wall.