Greek government plays up IMF’s revised budget projections

Greek government plays up IMF’s revised budget projections

Greece on Wednesday welcomed the publication of the International Monetary Fund’s (IMF) revised projections from last fall with regard to its primary budget surplus in 2017, hoping that this will strengthen its hand in negotiations with international creditors.

At the same time, the Fund’s negative predictions with regard to the sustainability of the country’s mountainous debt has fueled optimism in the left-led coalition over the prospect for significant restructuring.

Government sources claim that the predictions by the Washington-based organization are closer to the ones made in Athens, which European creditors are in agreement with.

More specifically, the Fund predicts a primary budget surplus of 1.8 percent of GDP for 2017, slightly above the agreed target of 1.75 percent. It also predicted a primary surplus of 3.3 percent for 2016, compared to its previous projection of 0.1 percent.

The agreed target was 0.5 percent and the Hellenic Statistical Authority (ELSTAT) is expected on Friday to announce a surplus of 4 percent.

However, the IMF predicts that Greece will not meet its fiscal targets for 2018 until at least 2022.

For 2018, the IMF has revised its forecast for a primary budget surplus to 2 percent against its October forecast of 1.6 percent, but still believes that the target of 3.5 percent set by the government and its European partners is overly ambitious.

As for the period stretching from 2019 to 2022, the IMF predicts that Greece will achieve primary surpluses closer to the tune of 1.5 percent.

IMF Managing Director Christine Lagarde has insisted that in the long run it makes sense for the Greek primary budget surplus to amount to 1.5 percent given all that the economy has gone through and “given the Greeks’ capacity to reform.”

However, government sources insist that the Fund has made a mistaken projection for 2018 and that there will be no need for additional measures next year, as any fiscal gaps will be covered by the so-called cutter – an automatic mechanism for cutting state spending in the event that the government misses budget targets – which was agreed on last May during negotiations for the first bailout review.

Meanwhile, ahead of Friday’s Spring Meetings of the World Bank Group and the IMF in Washington, Prime Minister Alexis Tsipras held lengthy consultations on Wednesday with Deputy Prime Minister Yiannis Dragasakis and Finance Minister Euclid Tsakalotos to discuss the way forward and focusing on the issue of the country’s debt.

The Spring Meetings will run until Sunday.

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