Greece keeps 2.7% growth estimate, boosts surplus target

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ATHENS: Greece on Monday said it expects to post 2.7-percent growth in 2017 after years of nearly consecutive recession in a budget that also predicts an above-target primary surplus.

The budget, to be voted on by parliament on December 10, includes extra taxation on cars, cellphones, pay TV, fuel, tobacco, coffee and beer.

Greece’s economy this year is set to shrink by 0.3 percent according to the latest estimates, continuing a slide uninterrupted since 2009 except for one year, 2014.

Under the terms of its latest EU bailout, Greece must register primary budget surpluses (before debt service) of 0.5 percent of GDP this year, 1.75 percent in 2017 and 3.5 percent in 2018.

The budget tabled Thursday said Greece beat its 2016 target by posting a 1.09-percent primary surplus, and will do so again in 2017 with a surplus of 2.0 percent.

It kept the growth target of the draft budget tabled in October, but improved the surplus, which at the time had been listed at 1.8 percent.

There are some, including the International Monetary Fund and Bank of Greece Governor Yannis Stournaras, who say the 3.5 percent target in 2018 is unrealistic.

Because of this difference of opinion, the IMF has said it won’t give a penny to the latest bailout — Greece’s third since 2010 — until it sees a concrete plan from the Europeans to cut substantially Greece’s massive debt burden.

Outgoing US President Barack Obama, while on an official visit to Greece last week, also called for debt relief.
Even with structural reforms, Obama argued, “it is very difficult to imagine the kind of growth strategy that is needed, without some debt relief mechanism.”

The talks are continuing, but Greece is hoping for a breakthrough on the issue by the end of the year.

Despite strong opposition by Germany, Eurogroup chief Jeroen Dijsselbloem last week said “short-term debt measures” could be discussed in December.

“There are some things we can do now and in the coming years a number of measures can be set up for the end of the programme,” Dijsselbloem said.

The debt will grow to 315 billion euros ($334 billion) or around 180 percent of output this year, the ministry said.
And privatisation proceeds are forecast at over 2.0 billion euros next year, including 1.2 billion from the sale of regional airports.

The Greek government has undertaken to cut the pensions and benefits of civil servants if it fails to reach the targets and to proceed with a controversial new round of privatizations.

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