IMF: Athens won’t meet primary budget surplus targets; spending ‘cutter’ activation predicted

6 October 2016
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The IMF foresees activation of an automatic spending cuts mechanism in Greece next year, saying the Greek government will not meet primary budget surplus targets, as a percentage of GDP, for 2017.

In a bid to prevent fallout, finance ministry sources emerged late Wednesday evening to counter the forecast, saying that the execution of the budget to date makes the 0.5-percent goal for a primary budget surplus easily attainable.

The IMF’s ominous prediction for activation of the spending mechanism comes in contrast with its forecast for GDP growth in Greece in 2017, which at a hefty 2.8 percent even exceeds the Greek government’s, which is listed in the draft budget submitted on Monday as 2.7 percent.

Although the primary budget surplus goal for 2016 is 0.5 percent of GDP, the IMF cited a figure of just 0.1 percent, whereas the government has
already provisioned a 0.6-percent figure for 2016 in its draft budget for 2017.

Looking to 2018 and the very ambitious goal of 3.5 percent, the IMF essentially considers it an unattainable dream, with the Greek economy until 2021 not reaching even half of the targets.

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