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EU clears extra two years for Greek deficit target

04 December 2012, 22:45 CET
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(BRUSSELS) - The European Union cleared on Tuesday an extra two years for Greece to bring its public deficit within formal EU limits, the latest piece of an Athens bailout jigsaw puzzle.

A day after Greece launched a debt buyback bid aimed at slicing 20 billion euros ($26 billion) from its huge debt pile, clearing a eurozone decision taken on November 12 now gives Athens until 2016 to get its spending gap below three percent of gross domestic product (GDP).

EU finance ministers, wrapping up two days of talks that ranged from bailouts to banks, said Greece "is estimated to have improved its structural deficit already by 13.9 percentage points of GDP from a 14.7 percent deficit in 2009 to an estimated 1.5 percent deficit in 2012."

But with economic activity expected to be "much weaker than previously expected," Greek officials are now expected to deliver on new targets "expressed in terms of a primary surplus as a percent of GDP" of zero percent in 2013, 1.5 percent in 2014, 3.0 percent in 2015 and 4.5 percent in 2016.

Prime Minister Antonis Samaras' government pushed a fresh batch of deeply unpopular cuts through parliament last month, the key for the eurozone and the International Monetary Fund to agree to unlock 43.7 billion euros in loans and grant significant debt relief going forward for decades to come.

Greece's private creditors have already written off more than 100 billion euros in debt, and the IMF has urged the ECB to accept this solution as well.

A mixture of techniques including the prolonged deficit targets are to be used to bring Greece's debt burden down from an estimated 144 percent of gross domestic product to 124 percent come 2020, and a ratio "substantially below 110 percent" by 2022.

Press release - 3205th ECONOMIC and FINANCIAL AFFAIRS Council meeting (provisional version) - Brussels, 4 December 2012


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