ECONOMY

Sustained growth projection

Finance Ministry expects high expansion rates and lays out rules for property leaseback

sustained-growth-projection

The Finance Ministry is optimistic the economy can sustain growth rates in excess of 3% up until at least 2025, with the annual expansion of gross domestic product possibly topping even 6%, according to what Minister Christos Staikouras told Wednesday’s cabinet meeting.

Based on the current midterm fiscal framework, Greece’s GDP will expand by 3.6% this year, followed in 2022 by a 6.2% economic jump. For the year after that the economy is projected to grow by 4.1%, followed by a 4.4% rate in 2024 and 3.3% in 2025.

The boost as of this year is expected to partly come through the dynamic rebound of investments, as the gross fixed capital formation is anticipated to grow 7% in 2021 before jumping 30% in 2022.

The economic outlook is further bolstered by exports of goods and services, which are projected to grow 10.4% in 2021 and 13.8% next year. On the employment front, the jobless rate is seen shrinking from 16.3% this year to just 11.1% at the end of the five-year period, thereby reverting to levels unseen since the outbreak of the debt crisis in 2010.

Meanwhile, the Finance Ministry has also produced a draft tender for the selection of the investor who will undertake the operation of the new Property Purchase and Leaseback Entity.

The ministry blueprint lays out the conditions for the private investor who will run the company to acquire the properties that constitute the main residences of vulnerable households and allow borrowers to pay rent to remain in them.

The cash that the entity will need to invest in that process will reach up to 2 billion euros, as it will acquire the properties at their market value, through auctions. It will then lease them back to their former owners, also giving them the option of buying them back from the entity after a 12-year period.

The bill also provides for the state subsidy of the above rent payable to the entity, up to the amount of €210 per month. The amount of rent will be determined based on each property’s market value, divided by 12 years with the addition of an average interest rate of a mortgage loan.