IMF sees primary surpluses and debt reduction for Greece until 2028

The return to primary surpluses from this year, which will increase until 2028, is predicted by the IMF in its report on the fiscal prospects of its members (Fiscal Monitor). Furthermore, it estimates that the reduction of the public debt will continue without an increase in taxes.

In particular, the IMF forecasts a primary surplus of 0.4% of GDP this year, which will increase to 1.4% of GDP in 2024, continue to increase to 1.6% and 1.8% of GDP in 2025 and in 2026 respectively, while it will stabilize at 2% of GDP in 2027 and 2028. It is worth noting that the Fund continues to calculate the primary surplus based on the methodology followed by the enhanced surveillance, which was completed last August. This is also the reason why for 2022 the IMF still predicts a primary deficit of 1.2% of GDP, when the economic staff of the government has spoken of a balanced budget.

Beyond that, the Fund projects deficit reduction but not a balanced budget, at least until 2028, as it projects the fiscal deficit as a percentage of GDP to decline from the 4% it predicts it reached in 2022 to 2.4% this year , 1.3% in 2024 and then to 1.1%, 0.9%, 0.8% and 0.7% respectively for 2025, 2026, 2027 and 2028.

Income, expenditure and debt

Regarding public revenues as a percentage of GDP, from their peak of 51.7% reached in 2023 due to the large increase in inflation, it is expected to decrease to 49.7% this year, 45.7% in 2024, 45.2% in 2025, 44.7% in 2026 and landing at 43.6% and 43% in 2027 and 2028.

A downward trend is also predicted for public expenditure, which as a percentage of GDP peaked in 2022 at 55.5% due to support measures against the energy crisis. They are expected to de-escalate to 50.3% in 2023, 47% in 2024 and then to 46.2%, 45.5%, 44.4% and 43.7% respectively for the years 2025, 2026, 2027 and 2028.

Finally, for public debt, the IMF predicts a decline, although the report includes the measurement of debt based on the liabilities that Greece would have if capitalized on the outstanding debt and interest on official sector loans. Therefore, the IMF projects that debt will decrease by 33.8% from 177.4% of GDP in 2022 to 143.6% at the end of 2028.