On March 6, 2019, the Executive Board of the International Monetary Fund
(IMF) concluded the First Post-Program Monitoring Discussions
[1]
with Greece.
The economic recovery in Greece is accelerating and broadening. Growth is
projected to reach 2.4 percent this year (up from an estimated 2.1 percent
in 2018) supported by exports, private consumption and investment as
sentiment improves. A gradual recovery in private deposits has facilitated
a further relaxation of capital flow management measures, though bank
lending remains negative. Over the medium term, economic expansion is
expected to slow down to just above 1 percent.
Greece’s medium-term debt repayment capacity is adequate, but subject to
rising risks amid still significant vulnerabilities. Debt-to-GDP is
projected to remain on a downward trajectory in the medium term thanks to
continued high primary surpluses agreed with European partners, nominal GDP
growth, and debt relief, which provided for a substantial precautionary
cash buffer and low debt service on official loans. However, risks (both
domestic and external) have intensified, and crises legacies—including high
public debt and impaired private balance sheets— and a weak payment
discipline continue to pose significant vulnerabilities.
Executive Board Assessment
[2]
Executive Directors welcomed the commendable progress in implementing
reforms which have helped restore stability and growth, reduce
unemployment, improve debt sustainability and re‑access markets. Building
on Greece’s growth momentum,
they encouraged the authorities to address still‑significant
vulnerabilities
and strengthen the economy’s resilience and inclusion by enhancing labor
market flexibility, rebalancing the fiscal policy mix, and strengthening
bank balance sheets to support sustainable and more inclusive growth.
Directors recognized that Greece’s medium‑term repayment capacity remains
adequate, but noted rising downside risks that require further actions to
strengthen the economy.
Directors noted that further efforts are needed to lock in competitiveness
gains, enhance productivity, and ensure labor market flexibility. They
expressed concern about the risks to employment and competitiveness from
the combination of the recent reversal of the 2012 collective bargaining
agreement reform and the
increase in the statutory minimum wage, which was well above
productivity growth.
Looking ahead, Directors encouraged the authorities to accelerate reforms
that could both mitigate these downside risks and help boost productivity
and lower non‑wage costs. They recommended further steps to improve the
business climate and facilitate higher and more diversified investment,
including long‑needed deeper product market reforms aimed at improving
product choice, quality, and competition.
Directors emphasized the importance of adopting a more growth‑friendly and
socially inclusive fiscal policy mix. They called for a further fiscal
rebalancing, while meeting medium‑term fiscal targets agreed with European
partners. Directors supported the planned tax cuts in 2020, prioritizing
lower direct tax rates while broadening the personal income tax base. They
also recommended allocating more fiscal space to public investment and
better targeted social spending. To support these objectives, Directors
also called for accelerating public financial management reforms and tax
compliance efforts and addressing the structural causes of arrears. They
also recommended deeper contingency planning for the possible realization
of rising fiscal risks.
Directors encouraged the authorities to take a more comprehensive,
well‑coordinated approach to strengthening bank balance sheets and reviving
growth‑enhancing lending. Noting the high level of non‑performing exposures
(NPEs), they encouraged the authorities to bring together key stakeholders
and base policy measures on cost‑efficiency assessments of various NPE
reduction options, while considering the impact of forthcoming regulatory
changes and related fiscal implications. Directors encouraged further
strengthening of the legal toolkit to facilitate private‑sector based NPE
reduction before considering state support, and to avoid measures that
could further erode payment discipline, while improving bank internal
governance. Liberalization of capital flow management measures should
continue in line with the conditions‑based roadmap.
|
Greece: Selected Economic Indicators
|
|
|
Population (millions of people)
|
10.8
|
|
|
Per capita GDP (€'000)
|
16.7
|
|
|
|
IMF quota (millions of SDRs)
|
2,428.9
|
|
|
Literacy rate (percent)
|
97.1
|
|
|
|
(Percent of total)
|
0.51
|
|
|
Poverty rate (percent)
|
34.8
|
|
|
|
Main products and exports: tourism services; shipping
services; food and beverages; industrial products;
petroleum products; chemical products.
|
|
| Key export markets: E.U. (Italy, Germany, Bulgaria, Cyprus, U. K.), Turkey, U.S. |
|
|
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
|
|
|
|
(proj.)
|
|
|
Output
|
|
|
|
|
|
|
|
|
|
|
Real GDP growth (percent)
|
1.5
|
2.1
|
2.4
|
2.2
|
1.6
|
1.2
|
1.2
|
1.2
|
|
|
Employment
|
|
|
|
|
|
|
|
|
|
|
Unemployment rate (percent)
|
21.5
|
19.6
|
18.5
|
17.5
|
16.2
|
15.0
|
14.3
|
13.6
|
|
|
Prices
|
|
|
|
|
|
|
|
|
|
|
CPI inflation (period avg., percent)
|
1.1
|
0.8
|
1.1
|
1.4
|
1.7
|
1.7
|
1.8
|
1.8
|
|
|
General government finances (percent of GDP) 1/
|
|
|
Revenue
|
48.3
|
49.0
|
47.5
|
46.0
|
45.2
|
44.4
|
44.2
|
44.0
|
|
|
Expenditure
|
47.3
|
48.6
|
47.7
|
45.9
|
45.1
|
44.4
|
44.7
|
44.7
|
|
|
Overall balance
|
1.0
|
0.4
|
-0.2
|
0.1
|
0.1
|
0.0
|
-0.5
|
-0.6
|
|
|
Overall balance (excl. program adjustors)
|
0.8
|
0.3
|
…
|
…
|
…
|
…
|
…
|
…
|
|
|
Primary balance
|
4.1
|
3.8
|
3.5
|
3.5
|
3.5
|
3.5
|
3.0
|
2.8
|
|
|
Public debt
|
179.3
|
183.3
|
174.2
|
167.3
|
160.9
|
153.8
|
147.2
|
143.2
|
|
|
Money and credit
|
|
|
|
|
|
|
|
|
|
|
Broad money (percent change)
|
5.7
|
4.2
|
…
|
…
|
…
|
…
|
…
|
…
|
|
|
Credit to private sector (percent change)
|
-5.8
|
-7.5
|
…
|
…
|
…
|
…
|
…
|
…
|
|
|
3-month T-bill rate (percent)
|
2.3
|
1.1
|
…
|
…
|
…
|
…
|
…
|
…
|
|
|
Balance of payments
|
|
|
|
|
|
|
|
|
|
|
Current account (percent of GDP)
|
-2.4
|
-3.4
|
-2.7
|
-2.6
|
-2.6
|
-2.6
|
-3.0
|
-3.4
|
|
|
FDI (percent of GDP)
|
-1.5
|
-1.6
|
-1.8
|
-1.5
|
-1.5
|
-1.5
|
-1.5
|
-1.5
|
|
|
External debt (percent of GDP)
|
224.0
|
217.7
|
208.2
|
200.8
|
194.3
|
189.2
|
184.9
|
181.8
|
|
|
Exchange rate
|
|
|
|
|
|
|
|
|
|
|
REER (percent change) 2/
|
1.0
|
0.8
|
-0.2
|
-0.7
|
-0.6
|
-0.4
|
-0.3
|
…
|
|
|
Sources: ELSTAT; Ministry of Finance; Bank of Greece; World
Bank, World Development Indicators; IMF, International
Finance Statistics; IMF, Direction of Trade Statistics; and
IMF staff projections.
|
|
|
1/ Based on the primary balance definition outlined in the
EU enhanced surveillance framework with Greece.
2/ Published data for trading partners not available yet
for 2024.
|
|
[1]
Member countries with IMF credit outstanding exceeding the smaller
of SDR1.5 billion or 200 percent of quota are subject to
Post-Program Monitoring (PPM). PPM takes place between successive
Article IV consultations and gives special attention to matters
related to capacity to repay the Fund, vulnerabilities, and risks.
[2]
At the conclusion of the discussion, the Managing Director, as
Chairman of the Board, summarizes the views of Executive Directors,
and this summary is transmitted to the country's authorities. An
explanation of any qualifiers used in summings up can be found
here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.