Greek PM promises hefty budget surplus, recovery in sight

Greek Prime Minister Antonis Samaras attends a news conference after a debate on the program of Greece's presidency of the EU for the next six months at the European Parliament in Strasbourg, January 15, 2014. REUTERS/Christian Hartmann (Reuters)

By George Georgiopoulos and Renee Maltezou ATHENS (Reuters) - Greece will post a budget surplus of at least 1 billion euros in 2013 and return the bulk of that to cash-strapped Greeks, Prime Minister Antonis Samaras said on Thursday, seeking to wrest momentum back from an emboldened leftist opposition. Samaras, whose two-party coalition has just a three-seat majority in parliament, is under growing pressure as polls show the leftist Syriza party steadily gaining ground against the ruling parties ahead of local and EU elections in May. Greece's economy shrank by almost a quarter and unemployment has soared since the country was forced to slash public spending to avoid bankruptcy. Although a six-year-long recession is seen coming to an end in 2014, many Greeks remain angry about the hardship they have endured. In a speech to lawmakers from his conservative New Democracy party, Samaras attacked Syriza for being irresponsible and urged his deputies to stay the course. "Syriza says 'no' to everything. And with these statements it creates problems not for the government but for the country, and puts at risk what we have worked to achieve - the sacrifices of the Greek people," Samaras said. He confirmed that Athens would report a surplus before interest payments of 1 billion euros or more in 2013, making it eligible for more debt relief from its euro zone and International Monetary Fund partners and allowing it to divert 70 percent of the surplus to help impoverished Greeks. Samaras also promised to see out his term through 2016, seeking to quash growing speculation that Greece could be headed for early elections this year. Talk of an early vote has been prompted by fears that New Democracy will fare poorly in European Elections or that Samaras would not be able to cobble together enough support to propose a candidate for the ceremonial job of President due to be elected in early 2015, which would trigger a dissolution of parliament. "WAITING AND FATIGUE" Samaras's comments came as prominent Greek think-tank IOBE warned the economy may suffer a small contraction this year even though the recession will bottom out. That is a more pessimistic view than that held by Samaras's government, which expects the 183 billion euro economy to pull out of recession this year and expand by 0.6 percent. "There is a climate of waiting and fatigue in the economy which could entail risks," said IOBE head Nikos Vettas. "There is a lack of dynamism in investment and structural reforms." "The level of investment is still anaemic as is the rate of increase in exports," he said. IOBE also warned of growing political risk as Samaras's government remains locked in protracted negotiations with the "troika" of European Commission, European Central Bank and IMF lenders and faces pressure from its leftist rivals. "Talks with the troika face delays," Vettas said. "There must be a minimum of political consensus on the course the country must follow, both among political parties and social partners, for the economy to get on the path of irreversible growth." (Additional reporting by Harry Papachristou; writing by Deepa Babington; Editing by Toby Chopra)