The government emphatically rejected on Friday the estimates of the International Monetary Fund on Greek growth and debt sustainability, despite the slight improvement in some of the IMF projections regarding the short-term outlook for the local economy included in the Article 4 report.
The Fund’s report, published on Friday, retains the same core approach as was already communicated to Athens, remaining pessimistic about Greek growth prospects and the long-term sustainability of the national debt. It also continues to insist on the need for cuts to pensions and the tax-free threshold, as well as the abolition of protection for primary residences.
The IMF argues that, based on realistic macroeconomic assumptions, the sustainability of the debt is not assured: A combination of negative developments (lower growth, higher interest rates) would see it soar to 221 percent of gross domestic product in 2024, according to the Fund.
Athens’ response was delivered by its representative to the Fund, Michalis Psalidopoulos, who offered a rather strong-worded reply, saying that the report is not balanced and places excessive emphasis on the past. Greece went on to call on the Fund to draw up much more balanced assessments in its next reports and to place more emphasis on the future.
Psalidopoulos further noted that several descriptions in the report are inaccurate and do not reflect the assessment of economic developments in Greece during the bailout programs. The Greek side added that the government “has the ownership of its reform agenda and has been elected with a mandate to implement it, so there is strong social consent.”
In its report, the IMF projects that growth will reach 2.3 percent next year, against its previous estimate (at its World Economic Outlook) of 2.2 percent, and a government forecast of 2.8 percent. However, it sees economic expansion at just 1.4 percent in 2022 and 0.9 percent in 2023 and 2024.
Interestingly, the Fund has raised its estimate for this year’s primary surplus from 3.3 percent to 3.7 percent of GDP, largely thanks to the latest figures the government has forwarded to it in the meantime. For next year, it now projects that the primary surplus will come to 3.1 percent, against a previous estimate of 2.6 percent.