## IMF Executive Board Concludes 2022 Article IV Consultation with Greece

_IMF News, June 21, 2022_

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## Bibliographic details
- Published: June 21, 2022

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### Economic recovery and near-term outlook
- The Greek economy recovered strongly from the severe COVID-19-induced recession, with output returning to the pre-pandemic level in 2021.
- Growth projections:
  - Real GDP growth (percent): 2021: 8.3; 2022 (proj.): 3.5; 2023 (proj.): 2.6.
- Inflation projections:
  - CPI inflation (period avg., percent): 2021: 0.6; 2022 (proj.): 6.1; 2023 (proj.): 1.2.
- Main drivers of the recovery: strong fiscal response, accommodative monetary policy and prudential policies, and sizable EU support.
- Risks and uncertainties:
  - Significant downside risks from a further intensification of the war in Ukraine and remaining uncertainties associated with the pandemic.
  - External position in 2021 was moderately weaker than consistent with fundamentals and desirable policies.

### Executive Board assessment and guidance
- Directors welcomed:
  - Stronger-than-expected economic recovery in 2021.
  - Early repayment of all outstanding IMF credit (completed in April), which terminates the Post Financing Assessment.
  - Progress on reforms addressing legacies from the debt crisis.
- Overall policy guidance:
  - Continue pursuing prudent policies and implementing growth-enhancing structural reforms to ensure debt sustainability and promote inclusive and greener growth.
  - Fiscal policy should remain accommodative but well-targeted in 2022, then return to a gradual and growth-friendly consolidation with sustained primary surpluses thereafter.

### Fiscal policy recommendations
- Fiscal stance and composition:
  - Replace across-the-board subsidies for high energy prices with targeted support for vulnerable groups.
  - Carefully assess implications of plans for permanent cuts in social security contributions and elimination of the solidarity tax.
  - Preserve recent increases in health spending and public investment.
  - Resist pressures to raise pensions and civil service wages.
  - Further enhance the Guaranteed Minimum Income scheme to form the basis for targeted support during adverse shocks.
- Public finances (percent of GDP):
  - Revenue: 2021: 48.9; 2022 (proj.): 48.4; 2023 (proj.): 47.4.
  - Expenditure: 2021: 56.9; 2022 (proj.): 52.9; 2023 (proj.): 49.3.
  - Overall balance: 2021: -8.0; 2022 (proj.): -4.5; 2023 (proj.): -1.9.
  - Primary balance: 2021: -5.5; 2022 (proj.): 0.9.
  - Public debt: 2021: 199.4; 2022 (proj.): 183.4; 2023 (proj.): 177.4.

### Financial sector and banking system
- Directors commended rapid reduction of non-performing loans in major banks and authorities’ commitment to address remaining challenges.
- Recommendations to strengthen financial resilience:
  - Implement the new insolvency law to reduce distressed debt.
  - Improve banks’ credit risk management and develop viable long-term restructurings.
  - Strengthen capital buffers and the quality of capital.
  - Restore sound profitability drivers, address medium-term funding challenges, and adapt business models.
  - Prepare a conditions-based roadmap to guide activation of macroprudential tools in the medium term should systemic vulnerabilities emerge.

### Structural reforms, labor market, and green transition
- National Recovery and Resilience Plan (supported by Next Generation EU funds) is a key opportunity to:
  - Cement past reform achievements.
  - Address structural bottlenecks, including in the labor market.
  - Raise growth potential and ensure sustainable, job-rich, and greener growth.
- Minimum wage and social policies:
  - Directors noted the positive impact of the minimum wage increase on households’ purchasing power and recommended monitoring potential effects on inflation and youth unemployment.
  - Welcomed authorities’ commitment to climate-friendly policies and stressed need for a stronger social safety net—potentially financed by higher carbon taxes when conditions allow—to facilitate the green transition.

### External sector and balance of payments
- Balance of payments indicators:
  - Current account (percent of GDP): 2021: -6.5.
  - FDI (percent of GDP): 2021: -2.2; 2022 (proj.): -2.9; 2023 (proj.): -2.5.
  - External debt (percent of GDP): 2021: 310.1; 2022 (proj.): 287.0; 2023 (proj.): 279.6.
- Exchange rate:
  - REER (percent change, CPI-based): 2021: -2.0; 2022 (proj.): -0.4; 2023 (proj.): -1.1.

### Key socio-economic and structural indicators
- Population (millions of people): 10.7
- Per capita GDP (€'000): 15.5
- IMF quota (millions of SDRs): 2428.9
- Literacy rate (percent): 97.9
- Poverty rate (percent): 27.4
- (Percent of total): 0.5
- GHG emission per capita (tonnes of CO2 equivalent): 8.4
- Main products and exports: tourism services; shipping services; food and beverages; industrial products; petroleum and chemicals.
- Key export markets: E.U. (Italy, Germany, Cyprus, Bulgaria, Spain), Turkey, USA, UK.

*IMF Communications Department — Press Release No. 22/218, June 21, 2022*

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## References

- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
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_Source: https://www.imf.org/en/news/articles/2022/06/21/pr22218-greece-imf-executive-board-concludes-2022-article-iv-consultation_