According to her post-memorial supervision report Commission for Hellaseconomic activity in our country is expected to accelerate slightly, with growth continuing to exceed long-term potential in 2024-2025.

As the Commission notes, after a period of stable rates inflation from mid-2023, the index is expected to decline at a moderate pace, reaching 2.8% in 2024 and 2.1% in 2025. At the same time, Greece maintains the capacity to service its debt. Greece was upgraded to investment grade by a third major rating agency in December 2023.

The European Commission’s fourth post-memorandum surveillance report concludes that Greece maintains its ability to service its debt.

“Greece maintains the ability to service its debt. Greece was upgraded to investment grade by a third major rating agency in December 2023,” the Commission’s report emphasizes. According to the debt sustainability analysis, Greece is considered to face low risks in the short term, high risks in the medium term and low risks in the long term. The Government’s gross financing needs for 2024 and 2025 are low, due to projected primary surpluses and moderate debt amortization, which is also due to the earlier partial prepayment of the Greek loan. “Greece maintains a significant cash reserve and has maintained continuous market access, amid tight yield margins, following recent upgrades to investment grade,” the Commission stresses.

The Commission’s report also points out the following:

Economic activity in Greece is expected to accelerate slightly, with growth continuing to exceed long-term potential in 2024-2025. Greece recorded real GDP growth of 2% in 2023, well above the EU and eurozone average of 0.4%, the report noted. Output growth is expected to regain momentum, supported by accelerating investment and solid private consumption growth, reaching 2.2% and 2.3% in 2024 and 2025, respectively.

After a period of stable inflation rates from mid-2023, inflation is expected to moderate to 2.8% in 2024 and 2.1% in 2025. Price pressures are expected to ease only gradually due to continued high food inflation and stable wage growth fueled by tighter labor market conditions and the recent increase in the minimum wage.

Unemployment is projected to continue to decline, although improvements in the labor market are expected to be slowed by strong labor market fragmentation.

Despite a significant narrowing of the current account deficit in 2023 to 6.3% of GDP, it remains high and is expected to narrow only modestly in the coming years due to an expected increase in capital goods imports amid stronger investment activity.

The headline budget deficit improved in 2023 and is expected to further improve to 1.2% of GDP in 2024 and 0.8% in 2025. The improvement in 2023 is mainly due to the phasing out of energy measures. The improvement in both years is mainly due to the moderate increase in current expenditure. The authorities have taken a number of fiscal measures in 2024, including self-employment tax reform, which will have a slightly positive impact on the overall fiscal balance.

The total stock of bad debts has increased, almost entirely due to hospital bad debts.

The backlog of pensions was further reduced.

The stock of non-performing loans in banks decreased further in 2023, mainly due to sales of non-performing loans.

Financial sector policies to address various legacy issues are largely on schedule and due to be completed in 2024.

The process of clearing the pending household insolvency cases is almost complete, as almost all cases (99.5%) will have been heard in court by mid-2024.

The process to set up the sales and leasing agency is expected to be completed in the fall of 2024. In liquidating the outstanding state guarantees, the authorities plan to process all claims by the end of 2024 and have enacted a number of provisions to eliminate the remaining legal uncertainties. However, actual payments on many guarantees given to companies will be delayed as they are subject to court orders.

The Hellenic Company of Assets and Holdings (HCAP) recorded its best financial performance since its establishment.

The privatization transactions managed by the Hellenic State Asset Development Fund are generally on track. The initial public offering of a 30% stake in Athens International Airport was oversubscribed, with investor orders exceeding 11 times the shares on offer.

The codification of labor legislation is ongoing and has yet to be completed. The adoption of the relevant presidential decree will mark the fulfillment of the Eurogroup’s policy commitment that required the adoption of the Labor Law Code and the Labor Regulatory Code to improve legal certainty and access to labor law.

The fourth monitoring mission to Greece after the program took place from 8 to 15 April 2024. European Commission staff participated in cooperation with European Central Bank (ECB) staff. Staff from the European Stability Mechanism (ESM) are involved in matters related to its Early Warning System, while staff from the International Monetary Fund were also involved.