Parliament’s Budget Office: Greek economy showing positive signs

Despite uncertainties in the international scene, the the Greek economy is showing positive developments, head of the Parliament’s Budget Office Fragiskos Koutentakis said on Tuesday.

During a presentation of the Budget Office’s quarterly report on the Greek economy, Koutentakis also stressed the importance of completing the assessment process in order for Greece to receive the final loan installment, and sending a positive signal to markets by promoting critical reforms.

The Budget Office director said that the main positive developments recorded in the report are as follows:
– The primary surplus of the 2018 budget was 700 million euros higher than in 2017.
– The issuance of the Greek government’s five-year bond in January was successful, not only because it secured a reduced interest rate and was welcomed with high demand, but also because the buyers’ composition improved. Also, lately and due to the normalization of the situation in Italy, yields on Greek ten-year bond are consistently below 4%.
– The growth rate of the Greek economy, according to forecasts, may well exceed 2%, although final figures for 2018 are not yet available.

The Budget Office head also mentioned the increase in the minimum wage and the abolition of the sub-minimum wage. He explained that concerns about their increase’s impact on competitiveness do not seem to be strong, given that the minimum wage is mainly paid to workers in sectors of the economy related to domestic demand rather than to exports. 

After referring to risk factors in the international environment – including the decline in growth in the eurozone, Brexit, and the results of the European Parliament elections – Koutentakis said the greatest financial risk Greece faces relates to developments in judicial decisions on the retroactive payment of pensions to civil servants. He also noted the negative development of low inflation in the Greek economy. 

At the same time, he said, the issue of non-performing loans and the proper implementation of the new financial management guidelines by the general government agencies are particularly important for the state budget. The reforms envisaged by the evaluation process in the public sector – including the appointment of secretaries-general in ministries and new staff for the  Independent Public Revenue Authority – will play a significant role in the future, he said. 

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