Greece: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Greece
IMF Staff Country Reports, November 15, 2019
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- Greece: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Greece
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Bibliographic details
- Published: November 15, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513520209.002
Summary and key messages
- Public debt is projected to trend down over the next decade, though long-term sustainability is not assured under realistic macro-fiscal assumptions.
- Still-weak bank balance sheets act as a drag on growth prospects and pose significant fiscal and financial stability risks.
- Greece is vulnerable to a range of external and domestic shocks.
- Improved living standards and economic convergence within the Euro Area (EA) depend on implementing a critical mass of inter-related fiscal, financial, and structural policy reforms.
- Success within the currency union critically hinges on narrowing Greece’s structural competitiveness gap.
Growth and fiscal policy guidance
- Fiscal policy mix should be improved with:
- more emphasis on investment and targeted social spending,
- lower direct taxes,
- reforms in revenue administration and public financial management.
- These fiscal adjustments aim to achieve better growth and social outcomes while addressing sustainability concerns.
Banking sector and financial stability
- Bank balance sheets remain weak and:
- act as a drag on growth prospects,
- pose significant fiscal and financial stability risks.
- Addressing bank-sector weaknesses is essential to reduce macro-financial vulnerabilities.
Structural reforms and competitiveness
- Policies should focus on productivity enhancement through:
- improved labor market flexibility,
- more effective labor activation policies,
- stronger institutions,
- business deregulation.
- Narrowing the structural competitiveness gap is identified as critical for Greece’s success in the Euro Area.
Vulnerabilities and outlook
- Greece remains exposed to external and domestic shocks due to:
- remaining fiscal risks tied to debt dynamics,
- weak financial-sector balance sheets,
- structural rigidities that limit convergence and productivity gains.
Content in this bundle
- 1. Illustrative Scenario—Higher Reform Payoffs