IMF predicts primary surplus and debt reduction for Greece by 2028

In its Fiscal Monitor report on its members’ fiscal outlook, the IMF predicts a return to primary surplus from this year, which will rise through 2028. It also estimates that public debt will continue to decline without tax increases.

In particular, the IMF predicts that the primary surplus will be 0.4% of GDP this year, grow to 1.4% of GDP in 2024, continue to grow to 1.6% and 1.8% of GDP in 2025 and 2026, respectively, and 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 used in the extended observation, which was completed in August last year. That is why the IMF is still forecasting a primary deficit of 1.2% of GDP for 2022 when the government’s economic headquarters spoke of a balanced budget.

After that, the fund projects a reduction in the deficit, but an unbalanced budget, at least until 2028, as it predicts the budget deficit as a percentage of GDP will fall from 4%, which it will reach in 2022, to 2.4% in this year, 1.3% in 2024 and then to 1.1%, 0.9%, 0.8% and 0.7% in 2025, 2026, 2027 and 2028 respectively.

In terms of government revenue as a percentage of GDP, from a peak of 51.7% reached in 2023 due to high inflation, it is expected to decline to 49.7% this year, 45.7% in 2024, 45 .2% in 2025, 44.7% in 2026 and up to 43.6% and 43% in 2027 and 2028.

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

Finally, in terms of public debt, the IMF predicts a decline, although the report does measure debt based on the obligations Greece would have if interest on official sector loans were capitalized in the debt balance sheet. As a result, according to IMF forecasts, debt will decrease by 33.8% from 177.4% of GDP in 2022 to 143.6% at the end of 2028.

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