© Reuters. Euro coins are seen in front of a displayed Greece flag in this picture illustration© Reuters. Euro coins are seen in front of a displayed Greece flag in this picture illustration

By Lefteris Papadimas

ATHENS (Reuters) – Greece expects to overshoot its budget surplus targets for a third consecutive year in 2018, a senior government official said on Monday, an outcome that could help ease the austerity burden imposed on a recession-weary population.

In a final budget draft due to be submitted to parliament on Tuesday, Greek authorities will outline projections of a primary surplus – the fiscal surplus excluding debt repayments – of between 2.4 and 2.5 percent this year, and of more than 3.7 percent next year, the official told Reuters.

The figures mark an upward revision in the size of the surplus for both years. A previous draft budget submitted on Oct. 2 had put the surplus at 2.2 percent for 2017 and 3.57 for 2018.

A strong fiscal surplus could allow the government – facing public fatigue with pension cuts and tax hikes – to redirect funds to vulnerable sections of the population hit hardest.

Authorities are also now expecting a 1.6 percent expansion in output this year, down from a previous forecast of 1.8 percent, said the official, speaking on condition of anonymity.

The Greek economy is expected to expand by 2.5 percent in 2018, the official added, up slightly from a previous 2.4 percent forecast.

The revision, the official said, was “in line with European Commission expectations”.

Greece has been in almost continuous recession since 2008, barring a brief sliver of growth recorded in 2014, and forced by three successive bailouts to carry out painful reforms that have included deep spending cuts and tax hikes. Its economy has shrunk by a quarter since the onset of the recession.


However, over the past year it has seen nascent growth from a resurgence in tourism and a pick-up in domestic demand.

Tourism revenues spiked 10.3 percent for the first nine months of this year to 12.99 billion euros compared to a year ago, data from the Bank of Greece showed on Monday.

Greece’s third financial bailout, worth up to 86 billion euros and brokered in mid-2015, is expected to expire in August 2018. At that point, Greece expects to be able to finance itself in financial markets, though some bailout cash will be put aside and remain in the bank.

“The final draft of the budget forecasts a cash buffer exceeding 15 billion euros for the post-programme period. That will be derived mainly from creditors’ financing, but also from revenues from new (bond) issues in 2018,” the official said.

Parliament is expected to vote on the draft budget in December.

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