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Greek economy to grow 2.8 per cent in 2020 — draft budget

3.5% primary surplus target 'excessive' — Lagarde

Wednesday, October 09, 2019

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ATHENS, Greece (AFP) — Greece expects its economy to grow by 2.8 per cent in 2020 whilst respecting fiscal pledges to the country's creditors, a draft budget released Monday said.

The draft also forecasts an unemployment fall to 15.6 per cent from 17.4 per cent this year, the finance ministry said.

European Union (EU) and International Monetary Fund (IMF) creditors want Greece to pursue economic and fiscal reforms and privatisations and achieve primary budget surpluses — which exclude government debt interest payments — worth 3.5 per cent of GDP in the coming years.

Prime Minister Kyriakos Mitsotakis wants to renegotiate this target with the creditors — but has agreed to retain it in 2020 to the tune of 3.56 per cent, the ministry said.

As Greece recovers from a six-year recession and a nearly decade-long debt crisis, the economy remains fragile.

Emerging from its third-straight bailout last year, it has a public debt of more than 180 per cent of gross domestic product, and remains under strict supervision by its creditors.

3.5 PER CENT EXCESSIVE AND AN OBSTACLE TO RECOVERY

Outgoing IMF chief Christine Lagarde last month called the 3.5 per cent level “excessive” and an obstacle to Greek economic recovery.

Elected in July on a platform of boosting economic growth and investment, Mitsotakis's new conservative Government has made boosting slugging growth a priority, powered by tax cuts and accompanied by privatisation deals.

The Administration also seeks to capitalise on decade-low borrowing rates on Greek debt. Within days of taking office, it sold a 7-year-bond at a record-low yield of 1.9 per cent.

It was the third bond sale this year, a first since Greece's economic crisis erupted in 2010.

Greece has also requested to repay 2.8 billion euros in IMF loans, to save interest rate costs.

After a decade-long crisis, painful reforms, and 289 billion euros (US$330 billion) in rescue loans, the country exited its third and final international bailout in August 2018.


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