Greece Won’t Meet Fiscal Surplus Targets Set By Europe, IMF Says

  • IMF projects fiscal surplus of only 1.5 percent in long run
  • European Union official says IMF not accounting for reforms

IMF Discusses Bailout for Greece

Greece is on track to fall short of budget-surplus targets set under a bailout by the nation’s euro-zone creditors, the International Monetary Fund said.

Greece’s primary budget surplus will rise to 1.5 percent over the long run from about 1 percent last year, amid a modest recovery, the IMF said Monday after executive directors met to discuss the fund’s annual assessment of the nation’s economy. Still, the projected surplus falls short of the 3.1 percent forecast by the country’s European creditors.

The fund reiterated its view that Greece’s debt is unsustainable. Most of the executive directors don’t believe the economy needs more fiscal consolidation, the IMF said.

Read more: A QuickTake explainer on Greece’s battle with austerity

The IMF has said it would consider giving Greece a new loan to supplement the 86 billion euros ($92 billion) it’s receiving from euro-area countries, but only if the nation’s debt-reduction plans are credible. Greece’s European creditors also want the IMF to sign off before disbursing the next tranche of the euro-zone bailout.

Greece’s government debt will reach 275 percent of its gross domestic product by 2060, when its financing needs will represent 62 percent of GDP, the IMF said in a draft staff report obtained by Bloomberg last month. Public debt will reach 181 percent of GDP this year, the IMF projected Monday.

Greece’s economy is expected to grow 2.7 percent this year, up from 0.4 percent in 2016, the fund said. However, long-run growth is expected to slip to about 1 percent, the IMF predicts.

The IMF’s assumptions aren’t based in reality and don’t take into account the reform of Greece’s public finances, according to a European Union official who spoke on condition of anonymity because the discussions are sensitive.

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