Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Greece.[1] The authorities have consented to the publication of the Staff Report prepared for this consultation.
The energy price shock from the Middle East war is a considerable headwind, but strong investment and structural reforms in the context of Next Generation EU (NGEU) are supporting growth. Recent reforms to reduce tax evasion have broadened the tax base and reduced informality, creating some space to support households’ disposable income while ensuring a rapid public debt reduction. The 2026 Financial Sector Assessment Program (FSAP)—the first since 2006—finds that systemic risks in the financial sector were low prior to the war and remain manageable.
GDP growth is projected to soften to 1.8 percent in 2026. While supported by higher public investment and household support measures, elevated energy prices and weaker external demand stemming from the war will weigh on private consumption and tourism. Over the medium term, growth is forecast to ease to 1½ percent against the backdrop of the declining working age population with low labor force participation and sluggish productivity growth.
Risks are tilted downward, especially stemming from a protracted war, an escalation of geopolitical tensions, and trade fragmentation, while domestic risks include delays in the execution of NGEU-funded projects. Upside risks to inflation arise from further rises in commodity prices, wage growth outpacing labor productivity, and higher costs associated with climate shocks.
Executive Board Assessment[2]
Executive Directors agreed with the thrust of the staff appraisal. They welcomed the Greek economy’s solid macroeconomic growth, restored fiscal credibility, and financial stability. While the energy price shock from the war in the Middle East poses a considerable headwind for the Greek economy amid still elevated inflation, Directors acknowledged that strong investment and ongoing reforms in the context of the Next Generation EU (NGEU) are supporting growth. They welcomed the continued improvement in public sector balance sheets, while noting that incomplete private sector balance sheet repair and remaining structural impediments weigh on medium-term growth and external balances. Directors called for the right macroeconomic and financial policy mix and completing the structural reform agenda to lock in the hard-won stability, lift supply constraints, and secure balanced and sustainable growth.
Directors commended the continued very strong fiscal performance underpinned by reforms to reduce tax evasion, which has supported a sustained reduction in public debt and provides room for temporary measures to mitigate the impact of higher energy prices. They agreed that maintaining primary surpluses and making full use of available EU funds to sustain public investment beyond NGEU will help further reduce public debt and sustain strong growth. They recommended focusing on efficient public investment and safeguarding social spending. Directors underscored that the energy price response should remain well targeted and temporary and preserve price signals. Further advancing fiscal structural reforms would enhance the effectiveness of fiscal policy.
Directors concurred that financial stability risks were low prior to the war and remain manageable, as evaluated by the 2026 Financial System Stability Assessment. They noted that the banking system demonstrates resilience under stress tests, but recommended closely monitoring common exposures to large firms. They also encouraged improving the resolution of legacy distressed debt outside the banking system and the supervision of credit servicers, and strengthening crisis preparedness and the financial safety net. Directors agreed that the quality of bank capital should continue to be enhanced, and additional macroprudential buffers could be considered to bolster resilience while avoiding procyclicality.
Directors underscored that ambitious structural reforms are essential for supporting higher, more inclusive, and productivity-driven growth and reducing persistent current account deficits. They recommended advancing digital transformation and further reducing regulatory and administrative burdens to promote competition and boost productivity. Raising labor force participation and improving workforce skills would help counter demographic pressures and support growth. Directors emphasized that completing the EU single market would further raise productivity and improve economic resilience. They also concurred that housing policies aimed at mobilizing existing supply more effectively, complemented by well-calibrated demand measures, would help improve housing affordability. Steps to achieve energy security are welcome.
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as Chair 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.
