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Economy

Athens insists on debt relief

Greece is currently urging the IMF and the EU Commission to extend its debt repayment period and a cut in interest rates, claiming that it has achieved a primary surplus. But economists come up with different numbers.

Fiscal stats show Greece has improved

During their Monday meeting in Brussels, eurozone finance ministers were to deal with the country logging the highest level of public debt in the 28-member European Union - it stands at more than 170 percent of gross domestic product (GDP).

Greece has been one of the nations worst hit by the euro area's economic crisis, but hopes have been high in Athens of turning the corner. In an effort to demonstrate the nation's recent progress, Greece has resumed borrowing on financial markets, and more importantly, it has reported a primary surplus after almost a decade of shortfalls.

By definition, a primary surplus means the nation has taken in more than it spent in a given year, interest payments excluded.

Cooking the books?

Two weeks ago, the European Commission said Athens managed to achieve a surplus of 1.5 billion euros ($2.08 billion) in 2013 and could now hope for further support from its creditors. Help would likely include lower interest rates on debt and a longer debt repayment period.

But a number of economists warned ahead of the meeting in Brussels that Greece's primary surplus was merely the result of very resourceful accounting applied with the knowledge of, and endorsed by, the creditors themselves - notably the European Union, the European Central Bank and the International Monetary Fund.

Even Greek economists acknowledged their country had a primary deficit of 16 billion euros last year, but the Troika of creditors agreed to not include one-off items in the calculation, such as a special 19.7-billion-euro shot in the arm for Greece's ailing banks.

"You can always make a balance sheet look good by just ignoring a number of one-off items," said the president of the Munich-based IFO economic think tank, Hans-Werner Sinn. But applying such methods is not very helpful as it distracts people's attention away from the huge debt load Greece is still grappling with, he added.

Athens making a comeback?

Otherwise, the EU Commission is keen to portray a very positive picture for Greece. The country that has been most affected by the debt crisis is ready to make a comeback, according to the Commission. GDP is expected to grow for the first time in six years in 2014, by around 0.6 percent. The recovery in the euro area should give a boost to the country's exports, according to the European Commission's economic forecast report published on May 5.

Greece's GDP is expected to grow by as much as 2.9 percent in 2015. Both investment and private consumption are expected to contribute significantly to growth," the EU forecasts. But unemployment is likely to decline slowly, with estimates indicating a drop in the rate from 27.3 percent last year to 24 percent in the coming year. Furthermore, the level of debt remains a huge problem, although the rate for new borrowing has seen a substantial decrease; from 12.7 percent in 2013 to 1.0 percent in 2015.

But public debt is still predicted to be around 172.4 percent of the total economic output, although the EU treaties set an upper limit of 60 percent.

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