Greece misses deficit target as bailout deadline looms

Cash-strapped Greece fell well short of its budget deficit reduction targets last year, official figures showed Wednesday in a development that’s likely to add pressure on the radical left-led government during tortuous talks with bailout creditors.

The country’s statistical authority said the 2014 deficit was 3.5 percent of Greece’s annual GDP, considerably higher than the 0.8 percent forecast. And after stripping out the cost of servicing Greece’s crippling public debt, a modest primary surplus of 0.4 percent was recorded — short of the 2 percent target.

The new government elected Jan. 25 had already said the shortfall would be bigger than expected. But the official confirmation comes at a time Greece is negotiating a long-delayed rescue loan installment, without which it will run out of cash.

Greece is unable to tap the international bond market for funds due to sky-high borrowing rates, which reflect a lack of confidence in the country being able to repay its debts. Greek stocks closed 1.9 percent down Wednesday, another sign that investors in the country are jittery.

Greece has been surviving on rescue loans from its European partners and the International Monetary Fund since mid-2010, and the new government won a four-month extension to the main, European part of its bailout in February.

Under the extension agreement, Athens must present a series of economic reform measures that meet the approval of its creditors. Authorities are hoping for a final agreement next week, when all 19 finance ministers from the eurozone countries, including Greece’s Yanis Varoufakis, meet on April 24 in the Latvian capital of Riga.

But several European officials have raised doubts about the possibility of a deal then. Greece has some big repayments coming up over the next few months and without the rest of its bailout cash, the country could be staring at a possible default and an exit from the euro.

Source: eNCA