Greece to need MORE debt relief as IMF thinks it will FAIL to meet growth forecasts | City & Business | Finance



Greece is preparing to end its final bailout programme in August, but is still struggling under a debt mountain of £202billion (€228bn).

The IMF fears that without more debt relief it may not be able to hold itself steady in the long run.

Peter Dohlman, the IMF mission chief for Greece, warned Greece’s future is based on best-case-scenario “assumptions”.

He said: “We are concerned this improvement in debt indicators can only be sustained over the long run under what appear to be very optimistic – maybe ambitious is a better word – assumptions on GDP growth and Greece’s ability to run high primary surpluses for an extended period of time.”

The “very optimistic” forecast comes from Greece agreeing to achieve a primary surplus of 3.5 percent of GDP annually until 2022 and 2.2 percent of GDP after that.

Mr Dohlman adds that Greece will need more funds to achieve this.

He said: “We think it could be difficult to sustain market access over the longer run without further debt relief.”

The Fund also warned Greece’s unfinished reform agenda, mainly to make its public sector more efficient and open up product and labour markets, will hamper faster growth. The Fund projects that Greece’s economy will expand by 2 percent this year and 2.4 percent in 2019.

Greece and its European partners agreed last week on a set of debt measures to help the country emerge smoothly from the programme.

Finance ministers in Luxembourg agreed a debt relief deal to extend maturities on about £85bn (€96bn) of Athens’ loans by 10 years and release £13bn (€15bn) to help the Greeks prepare for life off the financial drip feed.

A delighted Jean-Claude Juncker, President of the European Commission paid tribute to the Greek people.

He said: “Eurogroup agreement paves way for successful conclusion of the programme and a new chapter for the country. I will always fight for Greece to be at the heart of Europe.

“I pay tribute to the Greek people for their resilience and European commitment. Their efforts were not in vain.”


Source link