Greece will miss budget targets, IMF warns
The country’s budget surplus is expected to barely scrape half of the target set under the IMF-led bail-out
Washington/Valletta — Greece is on track to fall short of budget-surplus targets set under a bail-out by the nation’s eurozone creditors, the International Monetary Fund (IMF) has warned.
Greece’s primary budget surplus would rise to 1.5% over the long run from about 1% last year, amid a modest recovery, the IMF said on Monday, after executive directors met to discuss the fund’s annual assessment of the nation’s economy.
Still, the projected surplus falls short of the 3.1% forecast by the country’s European creditors.
The fund reiterated its view that Greece’s debt is unsustainable. Most of the executive directors do not believe the economy needs more fiscal consolidation, the IMF said.
The IMF has said it would consider giving Greece a new loan to supplement the €86bn it is receiving from euro-area countries, but only if the nation’s debt-reduction plans are credible.
Greece’s European creditors also want the IMF to sign off before disbursing the next tranche of the eurozone bail-out.
Greece’s government debt will reach 275% of its gross domestic product (GDP) by 2060, when its financing needs will represent 62% of GDP, the IMF said in a draft staff report obtained by Bloomberg last month. Public debt will reach 181% of GDP this year, the IMF projected Monday.
Greece’s economy is expected to grow 2.7% this year, up from 0.4% in 2016, the fund said. However, long-run growth is expected to slip to about 1%, the IMF predicts.
But European Union official says the IMF’s assumptions are not based in reality and do not take into account the reform of Greece’s public finances.
The official spoke on condition of anonymity because the discussions are sensitive.