{ "title": "IMF Executive Board Concludes 2018 Article IV Consultation with Greece", "publication": "IMF News, July 31, 2018", "sourceUrl": "https://www.imf.org/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation", "overlayPath": "/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "summary": "Date of conclusion: July 27, 2018.", "publishDate": "2018-07-31", "sections": [ { "heading": "Overview", "content": "- Date of conclusion: July 27, 2018.\n- Recent developments:\n - After a deep and protracted contraction, real GDP increased by 1.4 percent in 2017.\n - Recovery supported by large macroeconomic stabilization effort, structural reforms, a better external environment, and substantial support from European partners which secured medium-term sustainability and restored market access.\n - Persistent legacy issues: high unemployment and impaired public and private balance sheets.\n- Near-term projection:\n - Growth expected to reach 2 percent in 2018 and 2.4 percent in 2019.\n - Unemployment expected to decline as the output gap closes.\n- Risk environment:\n - External and domestic risks tilted to the downside, including slower trading partner growth, tighter global financial conditions, regional instability, the domestic political calendar, and risks of reform fatigue.\n - Long-term challenge: population aging expected to weigh down potential growth and increase the need to foster productivity." }, { "heading": "Executive Board Assessment", "content": "- Commendations:\n - Directors commended authorities for reforms and policy choices that largely eliminated fiscal and current account imbalances, stabilized the financial sector, reduced unemployment, and restored growth.\n - Debt relief by European partners welcomed; efforts put Greece on a path to successfully exit the European Stability Mechanism-supported program in August 2018.\n- Remaining concerns:\n - Significant crisis legacies and social pressures persist; risks to the outlook remain on the downside.\n- Fiscal stance:\n - Given significant adjustment to date, Directors agreed Greece does not require further fiscal consolidation.\n - Noted cost to growth of achieving high primary balance targets via high taxes and constrained social and investment spending.\n - Supported shift to a more growth-friendly and inclusive fiscal policy mix.\n - Welcomed authorities’ commitment to fully implement the pre-legislated fiscal package in 2019 and 2020.\n - Called for further fiscal rebalancing to reduce direct taxes and increase targeted social spending to support growth and reduce still-high poverty.\n- Financial sector and NPLs:\n - Urged acceleration of efforts to address high non-performing loans (NPLs) and restore lending.\n - Encouraged banks to use strengthened legislative and regulatory frameworks, including development of a secondary market for NPLs.\n - A number of Directors encouraged more ambitious NPL targets.\n - Called for building up capital buffers, mitigating liquidity and funding risks, and strengthening bank internal governance.\n - Supported gradual relaxation of exchange restrictions in line with the milestone-based roadmap, taking due account of banks’ liquidity.\n- Structural reforms and competitiveness:\n - In context of limited macroeconomic policy space, further structural reforms needed to boost productivity, competitiveness, and social inclusion.\n - Greece continues to score lower than peers in competitiveness indicators and lags peers in liberalizing most service sector professions.\n - Directors urged improvements in the business environment, fostering competition in product markets, and preserving labor market flexibility through a prudent minimum wage policy and preserving reforms to collective bargaining.\n- Governance, public sector efficiency, and statistics:\n - Underscored importance of public sector efficiency improvements and strengthened governance; noted shortcomings in tax enforcement.\n - Encouraged adequate protection from liability of public officials, implementation of the Anti-Corruption Action Plan with focus on data collection and transparency, and measures to modernize the judiciary.\n - Emphasized need to protect gains in the quality of official statistics by defending the statistical agency’s credibility and guaranteeing its professional independence, and addressing remaining shortcomings in reporting.\n- Debt sustainability and external support:\n - Welcomed debt relief measures by European partners and improvement in debt sustainability over the medium term.\n - Agreed relief combined with a large cash buffer will facilitate medium-term market access.\n - Some Directors considered long-term gross financing needs will be significantly reduced; many cautioned long-term sustainability remains uncertain and stressed need for realistic assumptions for primary balance targets and growth projections.\n - Welcomed continued commitment of Greece’s European partners to support the country in the future, including through further debt relief, if needed.\n- Post-program engagement:\n - Directors looked forward to close engagement between the authorities and the Fund under the post-program monitoring framework." }, { "heading": "Key Projections and Risks", "content": "- Growth:\n - Real GDP growth (percent): 2016: -0.2; 2017: 1.4; 2018 (proj.): 2.0; 2019 (proj.): 2.4; 2020: 2.2; 2021: 1.6; 2022: 1.2; 2023 (proj.): 1.2.\n- Unemployment:\n - Unemployment rate (percent): 2016: 23.6; 2017: 21.5; 2018 (proj.): 19.9; 2019 (proj.): 18.1; 2020: 16.3; 2021: 15.2; 2022: 14.4; 2023 (proj.): 14.1.\n- Inflation:\n - CPI inflation (period avg., percent): 2016: 0.0; 2017: 1.1; 2018 (proj.): 0.7; 2019 (proj.): 1.5; 2020: 1.7.\n- Fiscal indicators (percent of GDP) (based on program definitions outlined in the Technical Memorandum of Understanding of the Third Economic Adjustment Program):\n - Revenue: 2016: 50.2; 2017: 49.0; 2018 (proj.): 48.7; 2019 (proj.): 47.1; 2020: 46.4; 2021: 45.8; 2022: 45.0; 2023 (proj.): 45.4.\n - Expenditure: 2016: 49.5; 2017: 48.0; 2018 (proj.): 48.1; 2019 (proj.): 47.2; 2020: 46.2; 2021: 45.5; 2022: 44.9.\n - Overall balance: 2016: 0.5; 2017: -0.1; 2018 (proj.): 0.2; 2019 (proj.): 0.3; 2020: 0.1; 2021: -0.4.\n - Overall balance (excl. program adjustors): 2016: 0.6; 2017: 0.8.\n - Primary balance: 2016: 3.9; 2017: 4.2; 2018 (proj.): 3.5; 2019 (proj.): 3.0.\n - Public debt: 2016: 183.5; 2017: 181.8; 2018 (proj.): 188.1; 2019 (proj.): 177.1; 2020: 169.6; 2021: 162.9; 2022: 155.3; 2023 (proj.): 151.3.\n- Money and credit:\n - Broad money (percent change): 2016: 5.7.\n - Credit to private sector (percent change): 2016: -4.5; 2017: -5.8.\n - 3-month T-bill rate (percent): 2016: 3.1; 2017: 2.3.\n- Balance of payments:\n - Current account (percent of GDP): 2016: -1.1; 2017: -0.8; 2018 (proj.): -0.7; 2019 (proj.): -0.3.\n - FDI (percent of GDP): 2016: -2.4; 2017: -1.7; 2018 (proj.): -1.6; 2019 (proj.): -1.5.\n - External debt (percent of GDP): 2016: 247.8; 2017: 227.9; 2018 (proj.): 221.3; 2019 (proj.): 209.7; 2020: 199.7; 2021: 190.2; 2022: 182.5; 2023 (proj.): 177.6.\n- Exchange rate:\n - REER (percent change): 2016: 1.0." }, { "heading": "Selected Country Indicators and Structural Facts", "content": "- Population (millions of people): 10.8\n- Per capita GDP (€'000): 16.5\n- IMF quota (millions of SDRs): 2,428.9\n- Literacy rate (percent): 97.1\n- (Percent of total): 0.51\n- Poverty rate (percent): 35.7\n- Main products and exports: tourism services; shipping services; food and beverages; industrial products; petroleum products; chemical products.\n- Key export markets: E.U. (Italy, Germany, Bulgaria, Cyprus, U. K.), Turkey, U.S." }, { "heading": "Policy Recommendations and Actions Urged by Directors", "content": "- Fiscal policy:\n - Shift to a more growth-friendly and inclusive fiscal policy mix.\n - Implement pre-legislated fiscal package in 2019 and 2020.\n - Rebalance fiscal policy to reduce direct taxes and increase targeted social spending to support growth and reduce poverty.\n- Financial sector:\n - Accelerate reduction of NPLs, develop secondary market for NPLs, consider more ambitious NPL targets.\n - Build up capital buffers, mitigate liquidity and funding risks, and strengthen bank internal governance.\n - Gradually relax exchange restrictions in line with the milestone-based roadmap, accounting for bank liquidity.\n- Structural reforms:\n - Boost productivity, competitiveness, and social inclusion through further structural reforms.\n - Improve business environment and foster competition in product markets.\n - Preserve labor market flexibility with a prudent minimum wage policy and preservation of collective bargaining reforms.\n- Governance and institutions:\n - Improve public sector efficiency and tax enforcement.\n - Provide adequate protection from liability for public officials, implement Anti-Corruption Action Plan with focus on data collection and transparency, and modernize the judiciary.\n - Defend and guarantee professional independence and credibility of the statistical agency; address remaining reporting shortcomings.\n- Debt and external engagement:\n - Maintain realistic assumptions for primary balance targets and growth projections.\n - Continue engagement with European partners for support and potential further debt relief if needed.\n - Continue close engagement with the Fund under post-program monitoring.\n\nIMF Communications Department — Press Release No. 18/322 (July 31, 2018)\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Greece and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json)", "Published: July 31, 2018", "Date of conclusion: July 27, 2018.", "Recent developments:", "Near-term projection:", "Risk environment:", "Commendations:", "Remaining concerns:", "Fiscal stance:", "Financial sector and NPLs:", "Structural reforms and competitiveness:", "Governance, public sector efficiency, and statistics:", "Debt sustainability and external support:", "Post-program engagement:", "Growth:", "Unemployment:", "Inflation:", "Fiscal indicators (percent of GDP) (based on program definitions outlined in the Technical Memorandum of Understanding of the Third Economic Adjustment Program):", "Money and credit:", "Balance of payments:", "Exchange rate:", "Population (millions of people): 10.8", "Per capita GDP (€'000): 16.5", "IMF quota (millions of SDRs): 2,428.9", "Literacy rate (percent): 97.1", "(Percent of total): 0.51", "Poverty rate (percent): 35.7", "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.", "Fiscal policy:", "Financial sector:", "Structural reforms:", "Governance and institutions:", "Debt and external engagement:", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "json": "/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2018/07/31/pr18322-greece-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T22:08:14.846Z" }