{
  "title": "IMF Executive Board Concludes Second Post-Program Monitoring Discussions with Greece",
  "publication": "IMF News, November 30, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/11/30/pr20361-greece-imf-executive-board-concludes-second-post-program-monitoring-discussions",
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  "summary": "Economic indicators (2018, 2019, 2020 (prel./proj.), 2021 (proj.)): - Real GDP growth (percent): 1.9; -9.5; 5.7 - Unemployment rate (percent): 19.3; 17.3; 18.9 - CPI inflation (period avg., percent): 0.8; 0.5; -1.1; 0.6 - General government finances (percent of GDP) 1/: - Revenue: 47.8; 46.8; 47.7; ",
  "publishDate": "2020-11-30",
  "sections": [
    {
      "heading": "Pandemic impact and near-term outlook",
      "content": "- On November 20, 2020, the Executive Board of the International Monetary Fund (IMF) concluded the Second Post-Program Monitoring Discussions with Greece.\n- The pandemic interrupted a modest recovery; early implementation of travel restrictions, a ban on public events, and other social distancing measures helped contain the initial outbreak.\n- GDP contracted by 7.9 percent in 2020H1, moderately better than the Euro Area weighted average (-9 percent); a further hit is expected in Q3, the peak of Greece’s tourism season.\n- Overall, the economy is expected to contract sharply in 2020, before gradually recovering over the medium term, supported by:\n  - a recovery in private consumption;\n  - investment linked to privatization and the first tranches of Next Generation EU (NGEU) grants;\n  - higher goods exports."
    },
    {
      "heading": "Executive Board assessment and policy guidance",
      "content": "- Directors welcomed the authorities’ policy response to the pandemic as swift, sizable, and appropriately targeted at hard-hit households and businesses.\n- Noting substantial uncertainties and downside risks, Directors urged the authorities not to withdraw policy support prematurely.\n- Directors recommended:\n  - maintaining targeted fiscal accommodation and making good use of fiscal space in the near term while safeguarding medium-term sustainability;\n  - frontloading fiscal support next year ahead of Next Generation EU (NGEU) grant disbursements and ensuring effective use of these resources;\n  - prioritizing health care spending, better targeting social support, and enhancing public investment execution;\n  - relying progressively on viability assessments as the basis for targeting fiscal support to firms, debtors, and workers."
    },
    {
      "heading": "Debt sustainability and risks",
      "content": "- Greece's public debt remains sustainable over the medium-term with the pandemic-induced rise in debt vulnerabilities largely mitigated by a sizable cash buffer and NGEU funds, resulting in an adequate repayment capacity.\n- Staff will reexamine its long-run debt sustainability assessment during the next Article IV Consultation, envisaged to take place in the first half of 2021.\n- Main risks highlighted:\n  - a prolonged pandemic that would derail the anticipated rebound in tourism;\n  - a significant deterioration of bank balance sheets.\n- Directors noted that medium-term public debt repayment capacity remains adequate but could be impacted if severe downside risks materialize.\n- Directors emphasized that fiscal prudence, growth-friendly reforms, and continued regional support are essential for long-term debt sustainability."
    },
    {
      "heading": "Banking sector, insolvency, and non-performing loans",
      "content": "- Directors agreed that pandemic cushioning measures for banks should be gradually replaced by more tailored solutions to debtors in distress.\n- Recommended actions for the financial sector:\n  - adopt a comprehensive approach to addressing long-standing weaknesses in banks;\n  - conduct a cost-benefit analysis of the asset management company under consideration to tackle non-performing loans;\n  - ensure effective implementation of the new insolvency code to facilitate debt restructuring while minimizing moral hazard."
    },
    {
      "heading": "Structural reforms and labor market",
      "content": "- Directors commended the authorities for advancing structural reforms despite the pandemic.\n- Noted areas of progress: labor market flexibility and modernization, the business climate, digitalization, and green growth.\n- Directors encouraged further efforts to:\n  - facilitate re-skilling of the labor force;\n  - boost female labor force participation;\n  - continue product market liberalization."
    },
    {
      "heading": "Key statistics (selected)",
      "content": "- Population (millions of people): 10.7\n- Per capita GDP (€'000): 17.5\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): 31.8\n- GHG emissions per capita (tonnes of CO2 equivalent): 8.2 (10.9)\n\nEconomic indicators (2018, 2019, 2020 (prel./proj.), 2021 (proj.)):\n- Real GDP growth (percent): 1.9; -9.5; 5.7\n- Unemployment rate (percent): 19.3; 17.3; 18.9\n- CPI inflation (period avg., percent): 0.8; 0.5; -1.1; 0.6\n- General government finances (percent of GDP) 1/:\n  - Revenue: 47.8; 46.8; 47.7; 49.7\n  - Expenditure: 46.9; 46.2; 57.5; 54.0\n  - Overall balance: 0.9; -9.8; -4.3\n  - Primary balance: 4.2; 3.5; -6.8; -1.3\n  - Public debt: 184.8; 180.9; 208.1; 199.1\n- Broad money (percent change): 4.3; …\n- Credit to private sector (percent change): -7.5\n- 3-month T-bill rate (percent): 1.1\n- Current account (percent of GDP): -3.5; -2.1; -4.1\n- FDI (percent of GDP): -1.6; -2.0\n- External debt (percent of GDP): 227.8; 240.9; 255.4; 242.0\n\nMemorandum item:\n- Nominal GDP (billions of euros) 2/: 184.7; 187.5; 168.2; 179.3\n\nSources cited in the release: 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.\n\nIMF Executive Board Concludes Second Post-Program Monitoring Discussions with Greece (Press Release No. 20/361), November 30, 2020.\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- 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/2020/11/30/pr20361-greece-imf-executive-board-concludes-second-post-program-monitoring-discussions"
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    "Published: November 30, 2020",
    "On November 20, 2020, the Executive Board of the International Monetary Fund (IMF) concluded the Second Post-Program Monitoring Discussions with Greece.",
    "The pandemic interrupted a modest recovery; early implementation of travel restrictions, a ban on public events, and other social distancing measures helped contain the initial outbreak.",
    "GDP contracted by 7.9 percent in 2020H1, moderately better than the Euro Area weighted average (-9 percent); a further hit is expected in Q3, the peak of Greece’s tourism season.",
    "Overall, the economy is expected to contract sharply in 2020, before gradually recovering over the medium term, supported by:",
    "Directors welcomed the authorities’ policy response to the pandemic as swift, sizable, and appropriately targeted at hard-hit households and businesses.",
    "Noting substantial uncertainties and downside risks, Directors urged the authorities not to withdraw policy support prematurely.",
    "Directors recommended:",
    "Greece's public debt remains sustainable over the medium-term with the pandemic-induced rise in debt vulnerabilities largely mitigated by a sizable cash buffer and NGEU funds, resulting in an adequate repayment capacity.",
    "Staff will reexamine its long-run debt sustainability assessment during the next Article IV Consultation, envisaged to take place in the first half of 2021.",
    "Main risks highlighted:",
    "Directors noted that medium-term public debt repayment capacity remains adequate but could be impacted if severe downside risks materialize.",
    "Directors emphasized that fiscal prudence, growth-friendly reforms, and continued regional support are essential for long-term debt sustainability.",
    "Directors agreed that pandemic cushioning measures for banks should be gradually replaced by more tailored solutions to debtors in distress.",
    "Recommended actions for the financial sector:",
    "Directors commended the authorities for advancing structural reforms despite the pandemic.",
    "Noted areas of progress: labor market flexibility and modernization, the business climate, digitalization, and green growth.",
    "Directors encouraged further efforts to:",
    "Population (millions of people): 10.7",
    "Per capita GDP (€'000): 17.5",
    "IMF quota (millions of SDRs): 2,428.9",
    "Literacy rate (percent): 97.1",
    "(Percent of total): 0.51",
    "Poverty rate (percent): 31.8",
    "GHG emissions per capita (tonnes of CO2 equivalent): 8.2 (10.9)",
    "Real GDP growth (percent): 1.9; -9.5; 5.7",
    "Unemployment rate (percent): 19.3; 17.3; 18.9",
    "CPI inflation (period avg., percent): 0.8; 0.5; -1.1; 0.6",
    "General government finances (percent of GDP) 1/:",
    "Broad money (percent change): 4.3; …",
    "Credit to private sector (percent change): -7.5",
    "3-month T-bill rate (percent): 1.1",
    "Current account (percent of GDP): -3.5; -2.1; -4.1",
    "FDI (percent of GDP): -1.6; -2.0",
    "External debt (percent of GDP): 227.8; 240.9; 255.4; 242.0",
    "Nominal GDP (billions of euros) 2/: 184.7; 187.5; 168.2; 179.3",
    "[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)",
    "[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)"
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