Greece expects its economy to grow by 2.8% next year, driven by higher investments, improving domestic demand and tax cuts as the country recovers from a decade-long debt crisis.
Data from the 2020 budget, formally submitted to parliament for approval on Thursday, also forecast a primary surplus of 3.56% of gross domestic product next year, with debt falling to 167% percent of GDP from 173.3% this year.
Greece emerged from international bailouts supervised by its lenders in August 2018. But it still needs to meet fiscal targets, including a primary budget surplus – which excludes interest payments on its debt – of 3.5% of GDP up to 2022, which many consider unrealistic.
“Next year’s budget sets the foundations to confront the Greek economy’s big problems in the last years, the growth and investment gaps that kept it in the last place in the EU in terms of investments and in first place in terms of unemployment,” the draft budget said.
Corporate tax will be cut to 24% on 2019 profit from 28% currently and taxation on dividends will be halved to 5%.
Next year’s budget projects privatisation revenues to reach 2.445 billion euros.
The budget included no specific plans to tap debt markets next year, but it said the state’s strategy is to “maintain a presence as an issuer in markets”‘. It will also try to further improve the ratio of fixed-rate debt as a percentage of total outstanding government debt.
Finance Minister Christos Staikouras told reporters on Thursday that Greece will conclude an early repayment of loans from the International Monetary Fund next week, a move which helps Athens reduce its debt-servicing costs.
Greece’s euro zone lenders project that Greece’s economy will remain resilient next year, forecasting 2.3% economic growth in 2020, more than the euro area average of 1.2%. [reuters]