An IMF report says Greece still faces an uphill struggle after the end of its bailout program
Greece has just three weeks before the country embarks on life outside the bailout programs that have dominated public life for the last eight years.
But the International Monetary Fund have given a glum assessment of Greece’s prospects saying the “risks are tilted to the downside.”
The Washington-based lender published its debt sustainability analysis for Greece on Tuesday showing significant differences with the one that euro zone countries used to put together their debt relief offer for Athens in June.
“The debt relief recently agreed with Greece’s European partners has significantly improved debt sustainability over the medium term, but longer-term prospects remain uncertain,” the IMF report on Greece said.
“Staff are concerned, however, that this improvement in debt indicators can only be sustained over the long run under what appear to be very ambitious assumptions about GDP growth and Greece’s ability to run large primary fiscal surpluses, suggesting that it could be difficult to sustain market access over the longer run without further debt relief,” it said.
The IMF have recommended a reduction in high direct taxes, which were imposed to right the country's public finances but also constrain growth.
The economy is expected to grow 2 percent this year and 2.4 percent in 2019 but will slow to 1.2 percent in 2022. In the long term, the IMF report said, population ageing will further hinder economic activity.
The Fund also said a euro zone promise to provide more debt relief to Greece in the future, if necessary, was a good sign for those who wanted to invest in the country - providing some reassurance in case things would go wrong.
The IMF report also highlighted Greece's high unemployment rate, currently around 20 percent and expected to decline to 14.1 percent in 2023, and called for action to boost public administration and further reform product and labour markets.