Galery

1

The first advisory teams of creditor representatives that will monitor the implementation of the measures agreed under the third Memorandum of economic support are soon expected in Athens. Shortly before the inspections, the International Monetary Fund (IMF) however has warned that the dangers for the Greek economy have not remained in the past.

The IMF annual report on World Economic Outlook states that the signing of the third memorandum has limited the risks for Greece. At the same time, it emphasizes the high risk of pressure exerted on the part of capital markets if the instability in the implementation of reforms begins to dominate once again the Greek political stage.

According to the report, the occurrence of this scenario will be followed by a chain reaction in the euro zone member states. The IMF states that the instability in the financial and economic sector and in government bond markets that Greece would cause "is likely to spread throughout the euro zone" and its negative implications will possibly go beyond its borders.

At the same time, the IMF has left unchanged its forecast of recession in Greece, namely 2.3% in 2015 and 1.3% in 2016. IMF experts emphasize that at a time when the euro zone will report average economic growth, "the prospects for Greece are much more negative, following the long period of uncertainty since the beginning of the year." According to their forecasts, Greece will report an economic growth of 2.4% in 2020.

The report was presented at a press conference in the capital of Peru, Lima. In response to a question about the economic development of Greece, an IMF expert said that "as a result of the imposition of capital controls, which caused a decline in the pace of development, it will start to recover in the third quarter of 2015. It is important to monitor the annual pace of development and its course in each quarter. There will be not such a significant recovery but it will improve in 2016".

On unemployment in Greece, the IMF forecasts remain negative, namely for an unemployment rate of 26.8% in 2015 (compared to 26.5% in 2014) and 27.1% in 2016 (compared to the forecast of the Greek government for 25.8%). With regard to inflation, the IMF believes that Greece will report 0.4% deflation this year, which will become zero next year. Regarding the current accounts, the IMF estimates that the 0.9% surplus in 2014 will fall to 0.7% in 2015 and will reach 1.5% of GDP in 2016. The experts forecast a budget deficit of 0.2% of GDP in 2020.

The IMF presented the data just hours before the first teams of creditor technical representatives arrived in Athens. According to the sources referred to by the Greek daily Kathimerini, under the plan the heads of the missions will arrive in Greece in early November, when the first monitoring of the rescue programme will be officially launched.

Some sources familiar with the developments do not exclude the possibility of team heads arriving in Athens for a few days in October to organize the discussions and to avoid any delays. The technical teams will start working by checking the implementation progress of structural reforms (pension system, public administration, the recommendations of the OECD, privatization, etc.) and the talks will focus on the achievement of the budget for this year and for next year.

Another important issue that will occupy the experts is bank recapitalisation and all urgent changes in the Greek banking sector. It is considered particularly important by all participants in the process and it should be completed by the end of the year.

As to timing, the goal is for parliament to pass the first package of 49 preliminary actions by 15 October and the second whose content must be determined by the middle of the month by early November. The first monitoring of the implementation of the agreement with creditors is due to be completed by the end of November at the latest.