IMF: Greece to Return to Primary Surpluses in 2023

Greece will return to primary surpluses from 2023 and remain on a course of reducing its public debt, the IMF said in its Fiscal Monitor report released on Wednesday.

The Fund sees the general government’s primary surplus at 0.9% of GDP in 2023, rising to 2% in 2027, from primary deficits of 1.8% this year and 5.5% in 2021.

According to the report, the general government balance, including capital payments on debt, will show a deficit of 1.9% of GDP in 2023, from a shortfall of 4.4% this year, falling to 0.7% in 2027.

Public revenue is expected to fall from 47.6% of GDP this year to 45.9% in 2023 and to 43.6% in 2027, while public spending are projected to fall from 52% this year to 47.8% in 2023 and to 44.3% in 2027.

The general government debt is expected to fall from 199.4% of GDP in 2021 to 177.6% this year, to 169.8% in 2023 and to 149.9% in 2027.

IMF sees Greece continuing growth path in 2023

With more than a third of the global economy expected to fall into recession this year or in 2023, the IMF projected that Greece will keep its gross domestic product in a positive territory next year.

The Fund’s forecast is that the GDP will grow by 5.2% this year, against the government’s forecast of 5.3%, but also against its own forecast in June (3.5%), in the context of the Article IV report, as mainly tourism improved the data.

However, in the fourth quarter, it estimates that growth will be limited to 0.7% on an annual basis.

For 2023 its forecast for Greece drops to 1.8%, compared to a government estimate of 2.1% and its own previous forecast of 2.6%.

In the last quarter of 2023, it estimates that the pace will have accelerated to 7.5%: That means it will arrive at the average of 1.8% in 2023, the first quarters of the year will be on the brink of stagnation, if not with a negative sign at some point.

Based on the Greek government’s 2023 draft budget published earlier in October the economy of Greece will grow at a slower pace in 2023 after a strong rebound this year largely fueled by the tourism sector. The country’s economic output is seen increasing by 2.1% next year from 5.3% this year.

After tabling the draft plan in Parliament, Finance Minister Christos Staikouras and Alternate Minister Theodoros Skylakakis said that the 2023 budget was drafted in conditions of extremely high uncertainty over geopolitical developments globally.

The new budget tries to deal with challenges such as the energy crisis, inflationary pressures on households and enterprises, the health crisis, and increased defense spending.

At the same time, it is designed to maintain fiscal balance and meet sustainable growth targets along with supporting a wide range of reforms, the ministers said.