Greek Parliament's Budget Office dampens optimism over GDP growth in 2017

Parliament’s Budget Office fired another salvo over the leftist government’s bow on Monday, expressing a more-or-less pessimistic forecast over Greek economic growth prospects for 2017, while at the same time warning of an increase in private debt.

The independent Budget Office, in its quarterly report, reiterated that the situation in the country “undoubtedly remains critical … However, no reasonable person at this time wants the country’s exit from the crisis to fail…”

The report cites a “worrying” increase in the level of private sector debt towards all types of creditors, such as banks, the tax bureau, social security funds, utilities etc.

Even more ominous is a prediction that the level of non-performing loans will continue to increase, with the figure now exceeding 110 billion euros. Reducing NPLs and managing bad debt portfolios has emerged as a major demand by institutional creditors in talks with the Greek government over the past two years.

In terms of arrears to the tax bureau, the report points out that 1.1 billion euros of new arrears, on an average monthly basis, were accumulated over the first eight-month period of 2016 alone.
In terms of the all-important figure for GDP growth in 2017, the Budget Office is mindful of a government and Bank of Greece (BoG) forecast for a 2.7-percent increase, as well as the IMF’s even higher 2.8-percent prediction.
Nevertheless, the Budget Office report states that “the figures we have do not allow for optimism. The forecasts by non-state entities differ. If the pessimistic forecasts are confirmed, then expectations invested in the adjustment program (III memorandum) will be overturned… Overall, economic recovery is difficult after the conflict with creditors in the first half of 2015, which nearly led the country out of the Euro zone, as well as due to uncertainties created by delays in implementation of the first review of the third memorandum.”