The 2018 budget voted in Parliament on Tuesday night, marks Greece’s exit from the fiscal adjustment programme in August 2018, its return to the markets and the strengthening of growth rates.
The country’s first successful swap programme along with the estimates regarding the key figures of the Greek economy in 2018 are setting the framework for achieving this goal. A prominent feature of the positive developments is the significant decline in Greek government bond yields. Ten-year bonds fell for the first time to under 4 pct, paving the way for Greece’s tapping the markets again in the near future.
According to sources, the Finance ministry is considering the next issue of Greek state bonds to follow immediately the conclusion of the third programme review, which is expected in late January. More bonds are expected to be issued by the end of the programme in August 2018.
The growth of confidence in the Greek economy is also reflected on the budget estimates for both the primary surplus – which, for another year in 2017, significantly exceeded initial estimates – and the course of key economic fundamentals.
In particular, the primary surplus of 2018 is estimated to reach 3.82 pct of GDP against a 3.5 pct of GDP target in the medium-term fiscal strategy programme. In 2017, the primary surplus exceeded the original target of 1.75 pct of GDP and amounted to 2.44 pct of GDP, incorporating the expenditures of 1.4 billion or 0.78 pct of GDP for the social handout, the retroactive returns to pensioners and the payouts to Public Power Corporation (PPC).
The Greek economy is projected to grow by 2.5% in 2018 compared to 1.6%, which is projected to be 2017’s growth rate. In particular, GDP is projected to reach 184.691 billion euros in 2018 compared to 178.579 billion in 2017.
Employment is expected to reach 18.4 pct in 2018 compared to 19.9 pct this year.
Revenue from the new budget is expected to reach 54.244 billion euros compared to 52.142 billion euros this year, while spending will reach 55.188 billion euros compared to 57.265 billion euros in 2017.
The Public Investment Program will provide for 6.750 billion euros in expenditures, at the same level as in 2017.