The Greek economy will grow by 2.6 percent next year, according to an International Monetary Fund report, exceeding the government’s forecast for a 2.4 percent expansion.
Yet despite the optimistic forecast in its World Economic Outlook report, the Washington-based Fund stresses its concern regarding the sustainability of the national debt through its projections for the period after the end of the bailout program. The IMF sees growth in 2022 coming to just 1 percent. In previous reports it had explained its low growth forecasts by saying it didn’t expect reforms to be implemented.
In a special chapter of the report on “growth surprises for 2017,” the IMF points out that most of the world’s developed countries achieved have higher economic growth than expected, while Greece is the state ranked lowest.
Such data offer a taste of what the discussion will focus on at Saturday’s scheduled meeting between IMF Managing Director Christine Lagarde, Finance Minister Euclid Tsakalotos and his alternate, Giorgos Houliarakis.
If the IMF report – to be published in full on Wednesday – retains its primary surplus forecast for Greece at 2.2 percent of gross domestic product for next year, there may be a new discussion on additional fiscal measures of 2.3 billion euros so as to reach the target of 3.5 percent of GDP. If the IMF insists on this position and the Europeans – especially the Germans – insist on the participation of the Fund in the Greek program, negotiations could stumble again, hampering the third bailout review.
It therefore appears that the IMF will play a crucial role in yet another review, and it is possible Lagarde will reveal the Fund’s intentions to Tsakalotos and Houliarakis during Saturday’s meeting, a week before the creditors’ representatives are scheduled to return to Athens. Obviously the talks will also focus on the issues of the Greek banks, which until recently the Fund was determined should be put through asset quality reviews. Eventually it settled for the European Central Bank’s position that their stress tests be brought forward to February 2018.
The agenda of Saturday’s talks will also include the matter of the easing of the national debt, now that the German general election has taken place.