Greece’s finance minister, Euclid Tsakalotos, is set to receive European partners’ first “feedback” over recently announced tax cuts and other relief measures at Thursday’s Eurogroup meeting.
The modest tax breaks, VAT reductions and a partial re-institution of a so-called “13th pension”, up to 500 euros per beneficiary depending on their current monthly social security benefits, were abruptly announced by Greek Prime Minister Alexis Tsipras last week, some three weeks before a closely watched European Parliament election (May 26) that's emerging as a “political barometer” on whether the latter and his hard left SYRIZA party can stay in power up until October 2019 - when general elections must be held.
Based on the official agenda, Eurozone member-states’ finance ministers will focus on the European Commission’s recently announced spring economic forecasts. However, discussions over the Greek measures are expected on the sidelines of the May 16 session.
While the looming European Parliament election across the EU will, by all accounts, keep reactions muted at this stage, the Greek side will, nevertheless, have a first opportunity to gauge European partners’ reactions “face-to-face”.
Official reaction will undoubtedly come in early June, with the publication of the third post-bailout “enhanced supervision” review of the Greek economy and state finances – scheduled in the period after Europarliament results are announced.
Given that meeting annual fiscal targets through 2022 is a cornerstone of the post-bailout agreement between Athens and European creditors, the latter are expected to scrutinize and analyze whether the Tsipras government’s measures threaten the current year’s fiscal targets, primarily a 3.5-percent primary budget surplus as a percentage of GDP.