ATHENS (Reuters) - Greece could miss a primary surplus target agreed with its lenders this year, its central bank chief said on Tuesday, less than a week after the European Commission expressed misgivings over tax breaks announced by the outgoing government.
Yiannis Stournaras, governor of the Bank of Greece, said the country was likely to achieve a budget surplus, excluding debt servicing costs, of 2.9 percent of gross domestic product, undershooting a 3.5 percent target set by lenders.
Stournaras was speaking at an investment conference in Athens.
Greece's leftist Syriza administration introduced a bonus to pensioners and tax cuts last month, days before European Parliament elections which the party went on to lose to the conservative opposition New Democracy. That defeat prompted Prime Minister Alexis Tsipras to call a snap election for July 7, four months before the end of his term.
Any spending spree or slowdown in economic reforms is closely monitored by Greece's lenders. The country signed up to three bailouts worth more than 280 billion euros since 2010 in exchange for unpopular austerity measures and reforms.
The European Commission said on June 5 that the tax cuts and handouts to pensioners risked undermining the fiscal targets.
Greece wrapped up its last economic adjustment program last year, but remains under financial surveillance to ensure it meets its fiscal targets.
That includes ensuring the primary surplus should be at a consistent 3.5 percent of GDP each year until 2022, falling to 2.2 percent thereafter. The 3.5 percent target should be reviewed, and reduced in agreement with lenders, Stournaras said.
"Maintaining high primary surpluses has an adverse affect on GDP growth," he said.
(Reporting by George Georgiopoulos; Writing by Michele Kambas; Editing by Peter Graff)