While economic recovery in Greece is accelerating and reports confirm growth to reach 2.4 per cent this year (up from an estimated 2.1 percent in 2018), debt-to-GDP is projected to remain on a downward trajectory.
Financial growth supported by exports, private consumption and investment is gradually leading to recovery in private deposits in spite the fact of bank lending remaining negative.
While Greece’s medium-term debt repayment capacity is adequate, it remains subject risks which as people start to resort to bank loans again, intensify.
As a result to high public debt figures and impaired private balance sheets combined with a weak payment discipline, the International Monetary Fund Executive Board decided to postpone the release of 970 million euros, as Greece has not fulfilled its commitments according to the terms of the post-bailout reforms program.
European Stability Mechanism head, Klaus Regling said that IMF is “waiting for clarity on reform progress”.
Meanwhile, European Commissioner Pierre Moscovici noted that “The decision for the release will be at the next Eurogroup meeting on 5 April”.
German finance minister Olaf Scholz reportedly sent a memo to his euro-colleagues urging them to block the 970-million-euro.
The reform of the Katselis law on the protection of primary residence, that is expected to be completed by 25 March, is the only outstanding block.
“An agreement on the main pillars has already been reached, but the final details need to be determined,” all sides agreed, however, it was stressed that the procedure must have been completed by the next Euro Working Group that falls on the same date.
“At today’s Eurogroup meeting, during the debate on the 2nd European Commission report on Greece in the context of post-memorandum surveillance, significant progress has been made in the implementation of the actions undertaken by the Greek government, while the positive momentum in the country’s reform effort has been maintained,” the IMF Press Release said.
Finally, speaking to national TV broadcaster ERT, the IMF’s mission chief for Greece, Peter Dolman, reiterated the IMF demand for 2020 adding that “Greece needs to lower the tax-free base”.