## Greece: Staff Concluding Statement of the 2025 Article IV Consultation Mission _IMF News, January 30, 2025_ ## Source details **Canonical URL:** [Greece: Staff Concluding Statement of the 2025 Article IV Consultation Mission](https://www.imf.org/en/news/articles/2025/01/30/cs-greece-2025) ## Other formats - [Markdown version](/en/news/articles/2025/01/30/cs-greece-2025/index.md) - [Structured JSON version](/en/news/articles/2025/01/30/cs-greece-2025/index.json) - [Bundle manifest](/en/news/articles/2025/01/30/cs-greece-2025/bundle-manifest.json) ## Bibliographic details - Published: January 30, 2025 --- ### Economic outlook and key indicators - Real GDP expanded by 2.3 percent (year-on-year; y/y) in the first three quarters of 2024, supported by NGEU-funded investment projects and robust private consumption. - Unemployment rate fell to 9.5 percent (seasonally adjusted) in 2024Q3; vacancy rate has risen, reflecting labor shortages in construction, tourism-related services, and high-skill sectors. - Labor force participation rate has gradually risen but remains among the lowest in EU, especially for women. - Headline inflation at end-2024: 2.9 percent (y/y); core inflation at end-2024: 3.4 percent (y/y). - Credit growth to the private sector accelerated to 9.4 percent (y/y) in 2024Q4. - Current account deficit widened to an estimated 6.9 percent of GDP in 2024. - Residential real estate prices continued to increase alongside credit growth. - Renewable sources account for about 50 percent of total electricity generation. ### Growth projections and risks - Real GDP projected at 2.1 percent in 2025. - Medium-term GDP growth forecast to moderate to around 1¼ percent. - Current account deficit expected to narrow gradually below 4 percent of GDP in the medium term. - Risks to growth described as balanced; risks to inflation tilted upward. - Downside risks: growth slowdown in major euro area countries, deterioration of regional conflicts, global policy uncertainty. - Upside/mitigating factors: acceleration of ambitious structural reforms could improve growth prospects. - Inflation risks: stronger and more persistent-than-expected wage growth and energy price fluctuations could sustain services inflation. ### Public finances and fiscal recommendations - Public debt-to-GDP ratio estimated to have decreased by more than 50 percentage points from its peak in 2020 by end-2024. - Primary surplus expected to remain high at around 2½ percent of GDP in 2025. - Primary surplus in the medium term projected at 2.3 percent of GDP; public debt-to-GDP ratio projected to decrease by about 25 percentage points to below 130 percent by 2030. - Policy recommendations: - Continue fiscal consolidation in a growth-friendly manner. - Enhance efficient public investment planning and management through stronger centralized coordination and procurement. - Protect non-pension social spending (healthcare and education) while enhancing efficiency. - Resist excessive increases in pensions and public-sector wages; ensure pension increases adhere to the established indexation formula without ad hoc adjustment. - Use fiscal space from additional measures or better-than-expected performance for debt reduction and crucial social and capital spending, including energy security and the green transition. - Revenue and tax policy recommendations: - Continue reducing tax evasion and modernize tax administration leveraging digitalization under the Independent Authority for Public Revenue’s new medium-term strategy. - Focus tax policy on broadening the tax base and increasing tax progressivity. - Phase out inefficient tax expenditures, particularly regressive VAT exemptions on some goods and services. - Consider raising carbon pricing, particularly in transport and industry sectors, to generate revenue for improved social protection and address climate change and energy security. ### Structural reforms to boost potential growth - Labor market and skills: - Raise labor force participation and ensure a better skilled workforce. - Increase availability of childcare and elderly care facilities to enable higher female labor participation. - Reduce the tax wedge further, coupled with appropriate job search assistance and phasing out certain unemployment benefit features within the eligibility period to enhance work incentives. - Upgrade and scale up lifelong learning with private sector participation, particularly in digital and green skills, and healthcare to reduce skill mismatches. - Regulatory and judicial reforms: - Accelerate regulatory reforms to reduce barriers to entry, especially in services, and improve regulatory quality using digitalization and regulatory impact assessments. - Deepen the European single market to allow firms to scale and lift productivity. - Advance judicial system reforms to accelerate resolution of court cases and fully implement the new insolvency framework to address crisis legacy distressed debt and facilitate reallocation of capital. - Green and digital transition: - Improve power connectivity with distant islands and enhance energy efficiency in industries and transportation. - Scale up grid networks and storage solutions to support increased solar and wind capacity and ensure energy security. - Complete the EU-wide Energy Union and promote private sector adoption of digital technologies, building on public administration digitalization and the new national artificial intelligence strategy. ### Financial system resilience and supervision - Banking sector performance: - NPL ratio in systemically important banks dropped to around 3 percent in 2024Q3. - Banks sustained high profits and issued capital instruments, boosting capital adequacy; Deferred Tax Credit (DTC) still represents a substantial share of prudential capital. - Liquidity and funding risks have been markedly reduced with buffers well above prudential requirements and the EU average, aided by repayment of TLTROs and meeting MREL targets. - Policy recommendations for banks and supervisors: - Strengthen monitoring of credit risks and ensure adequate, forward-looking provisioning supported by adequate collateral valuations. - Scrutinize banks’ adaptation of business models and reinforce risk management frameworks. - Utilize elevated bank profits primarily to build capital buffers and improve the quality of capital; accelerate amortization of DTCs to enhance resilience and reduce the bank-sovereign nexus. - Macroprudential measures: - Welcome activation of borrower-based measures (BBMs) for mortgage loans (caps on loan-to-value (LTV) and debt service-to-income (DSTI) ratios) and a positive neutral countercyclical capital buffer (CCyB). - BBMs should help contain excessive mortgage leverage buildup while limiting banks’ exposure to the housing boom; close monitoring warranted. - Authorities could consider recalibrating the CCyB rate over the medium term to align with increasing uncertainty and enhance resilience given still relatively low combined capital buffers. *International Monetary Fund. Staff Concluding Statement of the 2025 Article IV Consultation Mission for Greece. January 30, 2025.* --- ## References - [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) - [Mission Concluding Statements](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2025/01/30/cs-greece-2025_