Washington, DC.- ANA-MPA
The director of the International Monetary Fund’s European department Poul Thomsen sent positive messages on Greece at a press conference he gave on Friday on the sidelines of the IMF and World Bank spring meetings. This indicates that the pieces for a final deal are gradually being put in place and that Greece could have a “good exit” from the program as long as reforms are implemented.
“There is no doubt that Greece could achieve the targets agreed upon with the Europeans. Our concern is whether Greece could do it in a way that is in line with strong growth in the midterm.”
Asked about a precautionary credit line, Thomsen said that this is a decision for Greece to make, as he stated his confidence in the country achieving the program’s targets.
As far as Greece regaining market access is concerned, he said that the the program must be completed, as well as its reforms.
“It will depend on the successful completion of the program and from the continued implementation of reforms when Greece will no longer be in the program. The challenge is for the government to maintain reforms and by doing this, I am sure Greece will be able to return to the markets,” he said.
IMF revises estimates
for Greek primary
The IMF has revised its forecasts for Greece’s primary surplus in 2017 and 2018. In its Fiscal Monitor report presented by the IMF’s Fiscal Affairs Director Vitor Gaspar, the Fund has improved its forecasts for the country’s primary surplus to 3.7 pct in 2017 and 2.9 pct in 2018, leading to estimates that this revision diminishes the possibilities for additional fiscal measures.
Replying to a question on Greece, Gaspar said the upward revision was the result of improving economic conditions in the country, while repeating IMF positions on the need for structural reforms and debt relief.
According to analysts, the revision of primary surpluses for Greece makes the prospect of additional fiscal measures less likely. The fact that the IMF forecasts that Greece’s surplus will be 2.9 pct of GDP rather than ESM target of 3.5 pct of GDP in 2018 will not have any impact since it more than covers the 2.2 pct IMF target already set last year in July, in agreement with Greek authorities.
The IMF more than doubled its forecasts for the primary surplus (excluding interest payments) in 2017, to 3.7 pct of GDP, sharply up from a previous forecasts of 1.7 pct. The IMF is also revising upwards its forecast for 2018 to 2.9 pct, up from an initial forecast of 2.2 pct. This forecast falls short of the 3.5 pct target set by ESM but it is fully consistent with the IMF’s targets. More specifically, the report said that the primary surplus will fall from 3.7 pct of GDP in 2017 to 2.9 pct in 2018 and will remain steadily at 3.5 pct of GDP in the period from 2019 to 2022. The Fund expects the Greek primary surplus to be around 1.5 pct of GDP in 2023. Including interest payment, the IMF said the Greek budget was balanced in 2017 and expects a slight fiscal deficit of 0.1 pct this year and a returned to balance in 2019. The country will present a fiscal surplus in 2020 (0.1 pct) up to 2021 (0.2 pct), but in the 2022-2023 period it expects a fiscal deficit of 0.2 pct and 0.4 pct, respectively.
The IMF said Greece is global champion in the developed world in the structural primary surplus in 2018 and sees a gradual reduction of the general government debt, by an accumulated 26.2 pct of GDP in the period 2018-2023. However, its forecasts for the Greek public debt are more conservative compared with European forecasts, resulting to a gap of 18.3 pct between them.
Greek growth to reach 2%
The Greek economy will return to high growth rates as of 2023, when the targets for primary surpluses have receded, the International Monetary Fund (IMF) said in its April 2018 World Economic Outlook report, presented on Tuesday at its Spring Meetings in Washington, DC.
In the data for Greece, the IMF said Greece’s development rate was 1.4% in 2017. This year it said it will reach a 2% growth rate, and next year it will be 1.8%. For 2023 it predicted a 1.9% growth rate, higher than its assessment six months ago (1%).
The IMF also foresaw a faster drop in unemployment than its forecast six months ago. Unemployment in Greece dropped to 21.5% in 2017 (in October, it had set it would settle at 22.3%). For this year, it sees a 19.8% unemployment rate, against 20.7% prediction last October. For 2019, the IMF foresees a drop to 18%.