(Adds Commission clarification on Greek primary surplus
BRUSSELS Feb 13 Greece will meet its primary
surplus target of 3.5 percent of gross domestic product next
year in line with its bailout commitments, the European
Commission forecast on Monday.
The size of next year's primary surplus - the budget balance
before debt-servicing costs - is in contention between euro zone
governments and the International Monetary Fund, which believes
the surplus will be only 1.5 percent.
A further disagreement between the two lenders to Greece is
over what surplus Athens will be able to maintain in the years
after 2018. The higher the surplus and the longer it is kept the
less is the need for any further debt relief to Greece.
The IMF insists Greek debt, which the Commission forecast on
Monday would fall to 177.2 percent of GDP this year from 179.7
percent in 2016 and then decline again to 170.6 percent in 2018,
is unsustainably high and that Greece must get debt relief.
Germany and several other euro zone countries say that if
Greece does all the agreed reforms then debt relief will not be
In a table of predictions of the primary balance for all 28
countries of the European Union calculated under a system used
by the European statistics office, the Commission forecast
Greece would have a primary surplus of 3.7 percent in 2018.
This would be better than the 3.5 percent primary surplus
agreed under the bailout.
But a Commission spokeswoman said that forecast was
calculated slightly differently than the primary surplus for the
purposes of the bailout, which excludes transfers of profits
made by national central banks on Greek bond portfolios back to
The bailout primary surplus calculations also exclude the
sale of non-financial assets such as land, buildings, leases,
concessions or licenses that are treated as sales of
non-financial assets and recorded as one-off transaction.
"Greece is forecast to meet its primary surplus programme
target in 2017 and 2018," European Commissioner for Economic and
Financial Affairs Pierre Moscovici told a news conference.
The Commission forecast that Greek investment would triple
to 12 percent of GDP this year and rise further to 14.2 percent
of GDP next year as the economy expands 2.7 percent in 2017 and
3.1 percent in 2018 after years of recession.
It also forecast Greek unemployment would fall to 22 percent
of the workforce this year from 23.4 percent last year and
decline further to 20.3 percent in 2018.
(Reporting By Jan Strupczewski; editing by Philip