Medium Term Fiscal Strategy Program forecasts 4% average growth in coming years

High growth rates for the coming years as well as a high primary and budget deficit for this year are predicted by the financial staff of the Greek government in the Medium Term Fiscal Strategy Program (MTFS) 2022 – 2025, which will be tendered to the Commission in the coming days.

The average growth rate for the period in question is estimated at 4%, while the primary deficit is expected to move above 7% this year and specifically to 7.2%.

In particular, with average growth at 4% of GDP for the next 4 years, the budget deficit of 9.7% of GDP in 2020 and 9.9% of GDP this year is expected by the end of 2025 to turn into a surplus of more than 1% of GDP.

At the same time, the primary deficit of 6.2% of GDP in 2020 and 7.2% of GDP estimated for this year, is expected to turn into a primary surplus of more than 3% of GDP in 2025.

However, the amount of the primary surplus will also depend on the decisions for Greece for the period after the expiration of the enhanced supervision in 2022.

In addition to growth, the cessation – at the end of next year – of the fiscal impact of the € 40.7 billion economic support measures implemented in 2020 and 2021 to address the effects of the pandemic will also play an important role. The support measures will burden the fiscal result of 2022 by 1.1% GDP.

The most important part of the support to the Greek economy is expected to come from the Public Investment Program, the Recovery Fund, but also the NSRF. According to information, the Medium Term estimates see Greece absorbing Community funds amounting to 10 billion euros every year until 2025.

Meanwhile, the Greek text is expected to predict a large reduction in public debt, to the order of 45%, which is based on the high growth rate, projected for the Greek economy.

The total debt reduction in terms of GDP is expected to exceed 45% of GDP for the four years 2022 -2025. Debt is expected to fall to 205% of GDP this year, and close to 160% of GDP in 2025.

The issue, of course, is to keep the current low-interest lending, which also prevails due to the ECB program. At the same time, the return of Greece to an investment level will act as a catalyst, something that is expected to take place by the end of next year.

This will result in very favorable lending rates and a debt, which will be consistently sustainable.