Greece targets faster growth, bigger primary surplus in 2018 draft budget


Greece expects economic recovery to gain pace next year when it aims to exit its bailout, the government’s draft budget showed on Monday, projecting that stronger growth will help it attain a bigger primary surplus and reduce unemployment.

Greece has only recently begun to emerge from a multi-year recession that wiped out about a quarter of its economy and drove unemployment to nearly 28 percent.

“This is the last budget under bailouts,” said Deputy Finance Minister George Houliarakis as he handed the draft budget to the speaker of the parliament.

The country’s leftist-led government sees the economy growing by 2.4 percent next year, picking up from a projected 1.8 percent expansion in 2017, according to the draft budget.

Unemployment is seen easing to 19 percent from 21.1 percent in the second quarter, but still double the eurozone’s current average of 9.1 percent.

On the fiscal front, Athens aims for an ambitious primary budget surplus of 3.57 percent of gross domestic product (GDP), excluding debt servicing outlays, slightly above what it has agreed with its official creditors.

Based on the budget, the government expects to outperform this year’s 1.75-percent-of-GDP primary surplus target, projecting that it will close the year with a 2.2 percent surplus.

Athens signed up to an international bailout in mid-2015 – its third since 2010. The government aims to have fully regained access to bond markets by next August, when the program ends.

The draft budget, which will be scrutinized by Greece’s official lenders later this month when they are due to begin a bailout review, sees public debt reaching 175.6 percent of GDP, edging up from 176.8 percent this year.

Greece plans new bond issues in 2018, including an exchange of bonds issued under a previous debt writedown in 2012 with new ones.

Debt relief measures expected to be specified in the coming period would be crucial to making the country’s debt burden manageable, according to the budget draft, which was prepared by Finance Minister Euclid Tsakalotos.

“These measures primarily aim at mitigating the present interest rate risk with optimal forecasts of future servicing costs, to enable the continuation of issues on international markets,” it said. [Reuters]