Athens Digest 05.09.2019

• Lagarde: Primary surplus target ‘excessive’, Greek reforms unfinished

• Athens welcomes Lagarde remarks as progress on primary surplus effort

• Strong exports boost growth in 2nd quarter

• Schools face ban on recording students’ religion


# Christine Lagarde has told European lawmakers that Greece’s primary surplus targets remain “excessive,” but noted that major reforms launched during bailout programmes remain unfinished. In a hearing at the European Parliament, Lagarde, who is set to become head of the European Central Bank, said high Greek surpluses are hurting its recovery. “I think we have consistently and we have been on record to say that a 3.5 percent primary surplus is _ in our view at the IMF and I’m speaking here still and in my capacity _ is excessive and is putting unduly pressure on the recovery of the Greek economy.” She added: “I think it’s also fair to say in retrospect that many of the structural reforms that were part of the overall package have not necessarily been delivered upon. And I very much hope that the new authorities in Greece will continue what had been initiated but will go deeper into reforming the markets to make it more competitive to make it more efficient.”

# Officials in Athens welcomed Lagarde’s remarks on the primary budget surplus, arguing that efforts to sway opinion among lenders on the issue were beginning to pay off. “The current government is trying in a diligent and persistent way to create the conditions necessary to achieve this goal,” Finance Minister Christos Staikouras said. “It (now) seems that positive momentum is being created in this direction within the leadership of the institutions.” Stelios Petsas, the government spokesman, said Greek authorities hoped lenders would take a positive view of the government’s proposal to tie returned central bank profits on Greek bonds to public investment and help ease primary surplus pressure. “There are upcoming meetings of the Euroworking group and the Eurogroup and then we will be in a position to say more,” he said. Prof. Michalis Argyrou, the new chairman of the Council of Economic Advisers, an advisory body to the finance ministry, will represent Greece at today’s Euroworking group meeting.

# Greece’s economy continued to improve in the second quarter of 2019, growing 1.9 percent on the year, from 1.1 (revised figure from 1.3) percent in January-March on an annual basis. The Greek Statistical Authority said GDP rose 0.8 percent in the second quarter, up from 0.2 percent in the first. The positive numbers were helped by strong exports and higher government spending. Consumer spending weakened ahead of the July general election.



On our Radar: Faith Ruling 
Schools should stop making an official record of students’ religion, a top privacy watchdog has ruled. The Data Protection Authority said that the practice was illegal and unconstitutional and called on schools to comply with its decision, which is non-binding for the Greek state. Religion is listed on school leaving certificates and is also recorded for students who request to be made exempt for religious classes at school. The issue is part of a long-running privacy debate that saw the record of religion dropped from state ID cards 19 years ago.