Greek Public Debt Remains Sustainable Despite The Pandemic

Greek Public Debt Remains Sustainable Despite The Pandemic

According to the International Monetary Fund, Greek public debt remains sustainable in the medium term, despite "unprecedented uncertainty" in all sectors of the economy as a result of the pandemic. The fund expects the Greek economy to shrink by 9.5 percent this year, but to strengthen by 5.7 percent next year. The country's public debt is projected to rise to a record 208 percent of gross domestic product (GDP) this year, but to fall to 199 percent of GDP in 2021. Last year, Greece's public debt was 181 percent of GDP. The Monetary Fund said that the recovery of the Greek economy in the medium term will be "supported by a recovery in private consumption, investments related to privatization and the first tranches of grants from the European Union, as well as higher exports of goods." The Monetary Fund added that increasing Greece's public debt vulnerability will be mitigated by EU funds and the government's high financial reserves. "The source of the main risks would be a long-lasting pandemic, which would derail the expected recovery in tourism, and a significant deterioration in banks' balance sheets," the monetary fund said.