Greece: Staff Report for the 2005 Article IV Consultation Supplementary Information

International Monetary Fund

doi:10.5089/9781451816235.002.A002

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Greece: Staff Report for the 2005 Article IV Consultation Supplementary Information

Author: International Monetary Fund

Publication Date:: 06 Jan 2006

eISBN:: 9781451816235

Language:: English

Keywords:: ISCR; CR; government; deficit; investment expenditure; fund staff estimate; staff projection; draft budget; spending growth; General government account

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This 2005 Article IV Consultation highlights that economic growth in Greece has been strong for several years, underpinned by a large fall in interest rates owing to adoption of the euro and subsequent European Central Bank easing. In 2005, the authorities implemented substantial fiscal consolidation, reducing the budget deficit to 4.6 percent of GDP on IMF staff calculations. Economic growth in 2006 and beyond is likely to be moderate compared with the high rates enjoyed in previous years, though it should remain comfortably above the euro area average.

Abstract

1. This supplement updates staff fiscal projections for 2006, based on information received after the staff report was finalized. In addition, the Public Information Notice is attached. This supplement does not change the thrust of the staff appraisal.

2. The authorities, in the draft budget submitted to parliament and in a submission to the EU, both on November 21, reaffirmed their commitment to reduce the deficit to 2.6 percent of GDP in 2006. The information in these documents is consistent with the staff report, but the nature of the unspecified revenue measures discussed in paragraph 11 has been clarified: they are tax revenue enhancements and temporary non-tax revenues. As foreshadowed in the report, staff projects that if the adopted measures produce revenues in line with the authorities’ expectations, which appears feasible, the 2006 general government budget deficit will fall to 2.7 percent of GDP.

3. The key aspects of revenue enhancement are measures to combat tax evasion and improvements in collection. These include a campaign to raise public awareness of penalties for tax evasion, more comprehensive cross-checking of invoices, intensified and better targeted audits, improved auditing information systems, and mandatory filing of periodic (every 1 or 3 months, depending on the class of business) VAT returns. Such initiatives are fully consistent with the recommendations of the Fund technical assistance mission on tax administration and, in this connection, the high level task force examining these recommendations has already offered its first proposals to the Minister of Finance. The temporary non-tax measures, accounting for about one-third (0.6 percent of GDP, as indicated in the staff report) of the deficit reduction in 2006, comprise extra dividends from three government-owned financial institutions sale, extension of concession rights, and clearance of fines and licenses by the Telecommunications and Post Commission. Securitization of tax arrears, which had been discussed at the time of the Article IV mission, will not take place in 2005 and has not been included as revenue in the 2006 budget.

Table 1

Greece: Selected Economic Indicators, 2000–06

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff estimates.

^{^1/}Annual averages. Figures for 2004 not fully comparable with those for previous years because of new sample as of 2004.

^{^2/}Latest data is for July (real effective exchange rate (consumer prices), nominal effective exchange rate); and September (real effective rate (manufacturing ULC)).

Table 1

Greece: Selected Economic Indicators, 2000–06

				2000	2001	2002	2003	2004	2005	2006
								Est.	Proj.
Domestic economy				(Percentage changes, unless otherwise indicated)
	GDP			4.5	4.6	3.8	4.6	4.7	3.5	3.3
	Output gap			-0.9	0.0	0.0	0.9	1.8	1.6	1.2
	Domestic demand			5.5	2.7	4.5	5.7	4.6	3.1	3.9
		Private consumption		2.2	2.9	3.3	4.5	4.4	4.4	4.0
		Public consumption		14.8	-1.5	7.3	-2.1	3.9	1.1	0.6
		Gross fixed capital formation		10.0	4.9	6.0	13.7	5.7	1.0	5.4
		Change in stocks (contribution)		0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Foreign balance (contribution)			-1.7	1.7	-1.1	-1.4	-0.5	0.1	-1.0
		Exports		14.1	-1.0	-7.7	1.0	11.7	6.2	5.9
		Imports		15.1	-5.2	-2.4	5.2	9.3	4.0	7.3
	Unemployment rate ^1/			11.4	10.8	10.3	9.7	10.5	10.0	10.0
	Employment			1.4	-0.1	2.2	2.4	0.9	1.1	0.5
	Unit labor costs (economy wide)			1.7	2.8	3.0	2.4	3.2	3.3	3.0
	Consumer prices (HICP), period average			2.9	3.7	3.9	3.4	3.0	3.6	3.3
	GDP deflator			3.4	3.5	4.0	3.5	3.6	3.6	3.3
				(In percent of GDP, settlements basis)
	Current Account			-6.9	-6.2	-6.0	-5.6	-3.8	-3.2	-3.6
	Trade balance			-10.9	-9.5	-8.4	-7.2	-6.0	-5.2	-5.5
		Export of goods and services		26.4	25.5	22.2	21.1	23.6	24.1	24.7
			Export of goods	9.1	8.8	7.3	7.2	7.6	7.0	6.5
			Exports of services	17.2	16.8	14.8	13.9	16.0	17.1	18.2
		Imports of goods and services		37.2	35.0	30.6	28.3	29.5	29.3	30.2
	Balance on capital account			-0.2	5.2	7.4	6.3	4.9	3.2	3.6
	Of which: Direct investment inflows			1.0	1.3	0.0	0.4	0.7	0.3	0.4
	Portfolio investment inflows			8.2	7.6	9.2	13.7	15.1	11.0	11.5
		Change in reserves (- is an increase in reserves)		-2.5	4.7	-1.4	2.9	1.6	0.0	0.0
Public finances (general government)				(In percent of GDP)
Total revenues				46.7	42.9	43.3	42.5	41.6	41.1	42.5
Total expenditures				50.8	48.9	48.3	48.3	48.3	45.6	45.2
	Primary expenditures			42.7	41.7	42.0	42.5	42.6	40.4	40.3
Overall balance				-4.1	-6.1	-4.9	-5.7	-6.6	-4.6	-2.7
Primary balance				4.0	1.2	1.3	0.0	-0.9	0.7	2.2
Structural overall balance				-3.7	-6.1	-5.0	-6.1	-7.4	-5.2	-3.2
Gross debt				114	114	112	109	111	108	104
Memorandum items:
	Nominal effective exchange rate ^2/			-6.2	0.7	1.7	3.6	1.1	-0.2	…
	Real effective exchange rate (consumer prices) ^2/			-6.1	1.0	2.9	4.9	2.1	1.5	…
	Real effective exchange rate (manufacturing ULCs) ^2/			-3.1	0.5	3.1	4.2	1.9	2.1	…
	Nominal GDP (in billions of euros)			122	132	142	154	167	179	191

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff estimates.

^{^1/}Annual averages. Figures for 2004 not fully comparable with those for previous years because of new sample as of 2004.

^{^2/}Latest data is for July (real effective exchange rate (consumer prices), nominal effective exchange rate); and September (real effective rate (manufacturing ULC)).

Table 1

Greece: Selected Economic Indicators, 2000–06

				2000	2001	2002	2003	2004	2005	2006
								Est.	Proj.
Domestic economy				(Percentage changes, unless otherwise indicated)
	GDP			4.5	4.6	3.8	4.6	4.7	3.5	3.3
	Output gap			-0.9	0.0	0.0	0.9	1.8	1.6	1.2
	Domestic demand			5.5	2.7	4.5	5.7	4.6	3.1	3.9
		Private consumption		2.2	2.9	3.3	4.5	4.4	4.4	4.0
		Public consumption		14.8	-1.5	7.3	-2.1	3.9	1.1	0.6
		Gross fixed capital formation		10.0	4.9	6.0	13.7	5.7	1.0	5.4
		Change in stocks (contribution)		0.0	0.0	0.0	0.0	0.0	0.0	0.0
	Foreign balance (contribution)			-1.7	1.7	-1.1	-1.4	-0.5	0.1	-1.0
		Exports		14.1	-1.0	-7.7	1.0	11.7	6.2	5.9
		Imports		15.1	-5.2	-2.4	5.2	9.3	4.0	7.3
	Unemployment rate ^1/			11.4	10.8	10.3	9.7	10.5	10.0	10.0
	Employment			1.4	-0.1	2.2	2.4	0.9	1.1	0.5
	Unit labor costs (economy wide)			1.7	2.8	3.0	2.4	3.2	3.3	3.0
	Consumer prices (HICP), period average			2.9	3.7	3.9	3.4	3.0	3.6	3.3
	GDP deflator			3.4	3.5	4.0	3.5	3.6	3.6	3.3
				(In percent of GDP, settlements basis)
	Current Account			-6.9	-6.2	-6.0	-5.6	-3.8	-3.2	-3.6
	Trade balance			-10.9	-9.5	-8.4	-7.2	-6.0	-5.2	-5.5
		Export of goods and services		26.4	25.5	22.2	21.1	23.6	24.1	24.7
			Export of goods	9.1	8.8	7.3	7.2	7.6	7.0	6.5
			Exports of services	17.2	16.8	14.8	13.9	16.0	17.1	18.2
		Imports of goods and services		37.2	35.0	30.6	28.3	29.5	29.3	30.2
	Balance on capital account			-0.2	5.2	7.4	6.3	4.9	3.2	3.6
	Of which: Direct investment inflows			1.0	1.3	0.0	0.4	0.7	0.3	0.4
	Portfolio investment inflows			8.2	7.6	9.2	13.7	15.1	11.0	11.5
		Change in reserves (- is an increase in reserves)		-2.5	4.7	-1.4	2.9	1.6	0.0	0.0
Public finances (general government)				(In percent of GDP)
Total revenues				46.7	42.9	43.3	42.5	41.6	41.1	42.5
Total expenditures				50.8	48.9	48.3	48.3	48.3	45.6	45.2
	Primary expenditures			42.7	41.7	42.0	42.5	42.6	40.4	40.3
Overall balance				-4.1	-6.1	-4.9	-5.7	-6.6	-4.6	-2.7
Primary balance				4.0	1.2	1.3	0.0	-0.9	0.7	2.2
Structural overall balance				-3.7	-6.1	-5.0	-6.1	-7.4	-5.2	-3.2
Gross debt				114	114	112	109	111	108	104
Memorandum items:
	Nominal effective exchange rate ^2/			-6.2	0.7	1.7	3.6	1.1	-0.2	…
	Real effective exchange rate (consumer prices) ^2/			-6.1	1.0	2.9	4.9	2.1	1.5	…
	Real effective exchange rate (manufacturing ULCs) ^2/			-3.1	0.5	3.1	4.2	1.9	2.1	…
	Nominal GDP (in billions of euros)			122	132	142	154	167	179	191

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff estimates.

^{^1/}Annual averages. Figures for 2004 not fully comparable with those for previous years because of new sample as of 2004.

^{^2/}Latest data is for July (real effective exchange rate (consumer prices), nominal effective exchange rate); and September (real effective rate (manufacturing ULC)).

Table 2

Greece: General Government Accounts, 2001–06

(Baseline Scenario)

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff projections.

Table 2

Greece: General Government Accounts, 2001–06

(Baseline Scenario)

			2000	2001	2002	2003	2004	2005		2006
								Authorities’ Estimate	Staff Projection	Authorities’ Estimate	Staff Projection
			(Billions of Euro)
Revenues			56.8	56.5	61.7	65.6	69.6	73.9	73.6	81.4	81.3
	Taxes on production and imports		18.5	19.4	21.0	22.1	23.2	23.8	23.7	25.8	25.7
	Taxes on income and property		13.2	12.5	13.4	13.5	14.7	16.1	16.0	17.6	17.5
	Social insurance contributions		17.0	18.4	21.3	23.7	24.5	26.5	26.5	28.8	28.8
	Other		4.3	5.6	4.4	3.9	3.9	3.8	3.8	4.1	4.1
	Temporary revenue measures		…	…	…	…	…	…	…	1.1	1.1
	Capital transfers		3.9	0.5	1.6	2.4	3.3	3.6	3.6	4.1	4.1
Expenditures			61.9	64.5	68.7	74.4	80.7	81.8	81.8	86.5	86.5
		Of which: wage bill	14.3	15.2	17.3	18.3	21.1	22.4	22.4	23.7	23.7
	Consumption		21.5	22.4	25.1	25.5	27.8	29.4	29.4	30.7	30.7
	Social transfers, excl. those in kind		20.2	22.5	24.2	27.3	28.7	31.6	31.6	34.6	34.6
	Interest		9.9	9.6	8.9	8.8	9.5	9.4	9.4	9.4	9.4
	Subsidies		0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2
	Other current expenditure		1.4	1.4	1.5	2.1	2.7	2.5	2.5	2.4	2.4
	Investment expenditure		8.7	8.4	8.7	10.5	11.7	8.7	8.7	9.1	9.1
		Of which: Olympics related expenditures	0.1	0.2	1.2	1.7	2.7	0.6	0.6	0.0	0.0
Overall balance			-5.0	-8.0	-7.0	-8.8	-11.1	-7.9	-8.2	-5.0	-5.2
Primary expenditures			51.9	54.9	59.8	65.6	71.2	72.4	72.4	77.1	77.1
Primary balance			4.9	1.5	1.9	0.0	-1.6	1.5	1.2	4.4	4.2
			(In percent of GDP)
Revenues			467	42.9	43.3	42.5	41.6	41.0	41.1	42.1	42.5
	Taxes on production and imports		15.2	14.7	14.8	14.3	13.9	13.2	13.2	13.3	13.4
	Taxes on income and property		10.8	9.5	9.4	8.8	8.8	9.0	8.9	9.1	9.2
	Social insurance contributions		14.0	14.0	15.0	15.4	14.6	14.7	14.8	14.9	15.1
	Other		3.6	4.3	3.1	2.5	2.3	2.1	2.1	2.1	2.2
	Temporary revenue measures		…	…	…	…	…	…	…	0.6	0.6
	Capital transfers		3.2	0.4	1.1	1.6	2.0	2.0	2.0	2.1	2.1
Expenditures			50.8	48.9	48.3	48.3	48.3	45.4	45.6	44.7	45.2
		Of which: wage bill	11.7	11.5	12.1	11.9	12.6	12.4	12.5	12.3	12.4
	Consumption		17.7	17.0	17.6	16.5	16.6	16.3	16.4	15.9	16.1
	Social transfers, excl. those in kind		16.6	17.1	17.0	17.7	17.2	17.6	17.6	17.9	18.1
	Interest		8.2	7.3	6.3	5.7	5.7	5.2	5.2	4.8	4.9
	Subsidies		0.2	0.1	0.1	0.2	0.1	0.1	0.1	0.1	0.1
	Other current expenditure		1.1	1.1	1.1	1.3	1.6	1.4	1.4	1.2	1.3
	Investment expenditure		7.2	6.4	6.1	6.8	7.0	4.8	4.8	4.7	4.8
		Of which: Olympics related expenditures	0.1	0.2	0.8	1.1	1.6	0.3	0.3	0.0	0.0
Overall balance			-4.1	-6.1	-4.9	-5.7	-6.6	-4.4	-4.6	-2.6	-2.7
Primary expenditures			42.7	41.7	42.0	42.5	42.6	40.2	40.4	39.9	40.3
Primary balance			4.0	1.2	1.3	0.0	-0.9	0.8	0.7	2.3	2.2
Structural primary balance			4.4	1.2	1.3	-0.4	-1.7	…	0.0	…	1.7
Structural overall balance			-3.7	-6.1	-5.0	-6.1	-7.4	…	-5.2	…	-3.2
Structural overall balance (net of expenditure on Olympics and temporary measures)			-3.7	-5.9	-4.1	-5.0	-5.8	…	-4.9	…	-3.8
Memorandum items
Gross debt			114	114	112	109	111	107	108	105	104
Nominal GDP (in billions of euros)			122	132	142	154	167	180	179	193	191

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff projections.

Table 2

Greece: General Government Accounts, 2001–06

(Baseline Scenario)

			2000	2001	2002	2003	2004	2005		2006
								Authorities’ Estimate	Staff Projection	Authorities’ Estimate	Staff Projection
			(Billions of Euro)
Revenues			56.8	56.5	61.7	65.6	69.6	73.9	73.6	81.4	81.3
	Taxes on production and imports		18.5	19.4	21.0	22.1	23.2	23.8	23.7	25.8	25.7
	Taxes on income and property		13.2	12.5	13.4	13.5	14.7	16.1	16.0	17.6	17.5
	Social insurance contributions		17.0	18.4	21.3	23.7	24.5	26.5	26.5	28.8	28.8
	Other		4.3	5.6	4.4	3.9	3.9	3.8	3.8	4.1	4.1
	Temporary revenue measures		…	…	…	…	…	…	…	1.1	1.1
	Capital transfers		3.9	0.5	1.6	2.4	3.3	3.6	3.6	4.1	4.1
Expenditures			61.9	64.5	68.7	74.4	80.7	81.8	81.8	86.5	86.5
		Of which: wage bill	14.3	15.2	17.3	18.3	21.1	22.4	22.4	23.7	23.7
	Consumption		21.5	22.4	25.1	25.5	27.8	29.4	29.4	30.7	30.7
	Social transfers, excl. those in kind		20.2	22.5	24.2	27.3	28.7	31.6	31.6	34.6	34.6
	Interest		9.9	9.6	8.9	8.8	9.5	9.4	9.4	9.4	9.4
	Subsidies		0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2	0.2
	Other current expenditure		1.4	1.4	1.5	2.1	2.7	2.5	2.5	2.4	2.4
	Investment expenditure		8.7	8.4	8.7	10.5	11.7	8.7	8.7	9.1	9.1
		Of which: Olympics related expenditures	0.1	0.2	1.2	1.7	2.7	0.6	0.6	0.0	0.0
Overall balance			-5.0	-8.0	-7.0	-8.8	-11.1	-7.9	-8.2	-5.0	-5.2
Primary expenditures			51.9	54.9	59.8	65.6	71.2	72.4	72.4	77.1	77.1
Primary balance			4.9	1.5	1.9	0.0	-1.6	1.5	1.2	4.4	4.2
			(In percent of GDP)
Revenues			467	42.9	43.3	42.5	41.6	41.0	41.1	42.1	42.5
	Taxes on production and imports		15.2	14.7	14.8	14.3	13.9	13.2	13.2	13.3	13.4
	Taxes on income and property		10.8	9.5	9.4	8.8	8.8	9.0	8.9	9.1	9.2
	Social insurance contributions		14.0	14.0	15.0	15.4	14.6	14.7	14.8	14.9	15.1
	Other		3.6	4.3	3.1	2.5	2.3	2.1	2.1	2.1	2.2
	Temporary revenue measures		…	…	…	…	…	…	…	0.6	0.6
	Capital transfers		3.2	0.4	1.1	1.6	2.0	2.0	2.0	2.1	2.1
Expenditures			50.8	48.9	48.3	48.3	48.3	45.4	45.6	44.7	45.2
		Of which: wage bill	11.7	11.5	12.1	11.9	12.6	12.4	12.5	12.3	12.4
	Consumption		17.7	17.0	17.6	16.5	16.6	16.3	16.4	15.9	16.1
	Social transfers, excl. those in kind		16.6	17.1	17.0	17.7	17.2	17.6	17.6	17.9	18.1
	Interest		8.2	7.3	6.3	5.7	5.7	5.2	5.2	4.8	4.9
	Subsidies		0.2	0.1	0.1	0.2	0.1	0.1	0.1	0.1	0.1
	Other current expenditure		1.1	1.1	1.1	1.3	1.6	1.4	1.4	1.2	1.3
	Investment expenditure		7.2	6.4	6.1	6.8	7.0	4.8	4.8	4.7	4.8
		Of which: Olympics related expenditures	0.1	0.2	0.8	1.1	1.6	0.3	0.3	0.0	0.0
Overall balance			-4.1	-6.1	-4.9	-5.7	-6.6	-4.4	-4.6	-2.6	-2.7
Primary expenditures			42.7	41.7	42.0	42.5	42.6	40.2	40.4	39.9	40.3
Primary balance			4.0	1.2	1.3	0.0	-0.9	0.8	0.7	2.3	2.2
Structural primary balance			4.4	1.2	1.3	-0.4	-1.7	…	0.0	…	1.7
Structural overall balance			-3.7	-6.1	-5.0	-6.1	-7.4	…	-5.2	…	-3.2
Structural overall balance (net of expenditure on Olympics and temporary measures)			-3.7	-5.9	-4.1	-5.0	-5.8	…	-4.9	…	-3.8
Memorandum items
Gross debt			114	114	112	109	111	107	108	105	104
Nominal GDP (in billions of euros)			122	132	142	154	167	180	179	193	191

Sources: National Statistical Service; Ministry of National Economy; Bank of Greece; and Fund staff projections.

Table 3.

Greece: Medium Term Baseline Scenario, 2004–10

(Percentage changes, unless otherwise indicated)

Source: Fund staff estimates and projections.

^{^1/}Assumes broadly constant ratio of revenue and primary expenditures to GDP as in 2005, and full utilization of EU structural funds.

Table 3.

Greece: Medium Term Baseline Scenario, 2004–10

(Percentage changes, unless otherwise indicated)

			2004	2005	2006	2007	2008	2009	2010
			Projections
Domestic economy
GDP			4.7	3.5	3.3	3.2	3.2	3.1	3.0
Output gap			1.8	1.6	1.2	0.9	0.6	0.4	0.0
Domestic demand			4.6	3.1	3.9	3.4	3.4	3.3	3.0
	Private consumption		4.4	4.4	4.0	3.7	3.9	3.9	3.7
	Public consumption		3.9	1.1	0.6	0.6	0.7	0.8	0.4
	Gross fixed capital formation		5.7	1.0	5.4	4.2	3.2	3.0	2.7
Foreign balance (contribution)			-0.5	0.1	-1.0	-0.6	-0.6	-0.5	-0.4
	Exports		11.7	6.2	5.9	5.7	5.5	5.3	5.0
	Imports		9.3	4.0	7.3	5.6	5.4	5.1	4.7
Unemployment rate			10.5	10.0	10.0	10.0	10.0	10.0	10.0
Employment			0.9	1.1	0.5	0.5	0.5	0.5	0.5
Unit labor costs (economy wide)			3.2	3.3	3.0	3.0	3.0	3.0	3.0
Consumer prices (HICP), end of period			3.1	3.6	3.3	3.0	2.9	2.8	2.7
Consumer prices (HICP), period average			3.0	3.6	3.3	3.0	2.9	2.8	2.7
GDP deflator			3.6	3.6	3.3	3.0	2.9	2.8	2.7
External sector (in percent of GDP)
Current account (national accounts; settlements basis)			-3.8	-3.2	-3.6	-3.7	-3.8	-3.9	-4.0
	Trade balance (in percent of GDP, settlements basis)		-6.0	-5.2	-5.5	-5.4	-5.4	-5.5	-5.5
		Exports of goods and services	23.6	24.1	24.7	25.3	25.9	26.4	26.9
		Imports of goods and services	29.5	29.3	30.2	30.7	31.3	31.8	32.4
	Total transfers		3.6	3.4	3.1	3.0	2.8	2.6	2.5
	Net income receipts		-1.5	-1.4	-1.3	-1.2	-1.1	-1.1	-1.0
Capital account			4.9	3.2	3.6	3.7	3.8	3.9	4.0
Direct investment (net)			0.4	0.1	0.2	0.2	0.2	0.2	0.2
Portfolio investment (net)			8.4	7.0	6.8	6.5	6.0	5.7	5.4
Other investment			-5.4	-3.9	-3.4	-3.0	-2.3	-1.9	-1.5
Change in reserves			2	0	0	0	0	0	0
Public finances (general government, in percent of GDP) ^1/
Total revenues			41.6	41.1	42.5	42.1	42.3	42.6	42.9
Total expenditures			48.3	45.6	45.2	45.2	45.2	45.1	45.1
	Primary expenditures		42.6	40.4	40.3	40.4	40.5	40.3	40.5
	Interest expenditures		5.7	5.2	4.9	4.8	4.7	4.7	4.7
Overall balance			-6.6	-4.6	-2.7	-3.2	-2.9	-2.5	-2.2
Primary balance			-0.9	0.7	2.2	1.7	1.8	2.2	2.4
Overall balance (excluding Olympics)			-5.0	-4.2	-3.3	-3.2	-2.9	-2.5	-2.2
Structural primary balance			-1.7	0.0	1.7	1.3	1.5	2.1	2.4
Structural overall balance			-7.4	-5.2	-3.2	-3.5	-3.2	-2.7	-2.3
Structural overall balance (net of Olympics expenditure and temporary revenue measures)			-5.8	-4.9	-3.8	-3.5	-3.2	-2.7	-2.3
Real primary spending growth			4.8	-1.8	3.1	3.5	3.4	2.8	3.2
Gross debt			111	108	104	101	98	95	92
Memorandum item
Nominal GDP (in billions of euros)			167	179	191	203	216	229	242

Source: Fund staff estimates and projections.

^{^1/}Assumes broadly constant ratio of revenue and primary expenditures to GDP as in 2005, and full utilization of EU structural funds.

Table 3.

Greece: Medium Term Baseline Scenario, 2004–10

(Percentage changes, unless otherwise indicated)

			2004	2005	2006	2007	2008	2009	2010
			Projections
Domestic economy
GDP			4.7	3.5	3.3	3.2	3.2	3.1	3.0
Output gap			1.8	1.6	1.2	0.9	0.6	0.4	0.0
Domestic demand			4.6	3.1	3.9	3.4	3.4	3.3	3.0
	Private consumption		4.4	4.4	4.0	3.7	3.9	3.9	3.7
	Public consumption		3.9	1.1	0.6	0.6	0.7	0.8	0.4
	Gross fixed capital formation		5.7	1.0	5.4	4.2	3.2	3.0	2.7
Foreign balance (contribution)			-0.5	0.1	-1.0	-0.6	-0.6	-0.5	-0.4
	Exports		11.7	6.2	5.9	5.7	5.5	5.3	5.0
	Imports		9.3	4.0	7.3	5.6	5.4	5.1	4.7
Unemployment rate			10.5	10.0	10.0	10.0	10.0	10.0	10.0
Employment			0.9	1.1	0.5	0.5	0.5	0.5	0.5
Unit labor costs (economy wide)			3.2	3.3	3.0	3.0	3.0	3.0	3.0
Consumer prices (HICP), end of period			3.1	3.6	3.3	3.0	2.9	2.8	2.7
Consumer prices (HICP), period average			3.0	3.6	3.3	3.0	2.9	2.8	2.7
GDP deflator			3.6	3.6	3.3	3.0	2.9	2.8	2.7
External sector (in percent of GDP)
Current account (national accounts; settlements basis)			-3.8	-3.2	-3.6	-3.7	-3.8	-3.9	-4.0
	Trade balance (in percent of GDP, settlements basis)		-6.0	-5.2	-5.5	-5.4	-5.4	-5.5	-5.5
		Exports of goods and services	23.6	24.1	24.7	25.3	25.9	26.4	26.9
		Imports of goods and services	29.5	29.3	30.2	30.7	31.3	31.8	32.4
	Total transfers		3.6	3.4	3.1	3.0	2.8	2.6	2.5
	Net income receipts		-1.5	-1.4	-1.3	-1.2	-1.1	-1.1	-1.0
Capital account			4.9	3.2	3.6	3.7	3.8	3.9	4.0
Direct investment (net)			0.4	0.1	0.2	0.2	0.2	0.2	0.2
Portfolio investment (net)			8.4	7.0	6.8	6.5	6.0	5.7	5.4
Other investment			-5.4	-3.9	-3.4	-3.0	-2.3	-1.9	-1.5
Change in reserves			2	0	0	0	0	0	0
Public finances (general government, in percent of GDP) ^1/
Total revenues			41.6	41.1	42.5	42.1	42.3	42.6	42.9
Total expenditures			48.3	45.6	45.2	45.2	45.2	45.1	45.1
	Primary expenditures		42.6	40.4	40.3	40.4	40.5	40.3	40.5
	Interest expenditures		5.7	5.2	4.9	4.8	4.7	4.7	4.7
Overall balance			-6.6	-4.6	-2.7	-3.2	-2.9	-2.5	-2.2
Primary balance			-0.9	0.7	2.2	1.7	1.8	2.2	2.4
Overall balance (excluding Olympics)			-5.0	-4.2	-3.3	-3.2	-2.9	-2.5	-2.2
Structural primary balance			-1.7	0.0	1.7	1.3	1.5	2.1	2.4
Structural overall balance			-7.4	-5.2	-3.2	-3.5	-3.2	-2.7	-2.3
Structural overall balance (net of Olympics expenditure and temporary revenue measures)			-5.8	-4.9	-3.8	-3.5	-3.2	-2.7	-2.3
Real primary spending growth			4.8	-1.8	3.1	3.5	3.4	2.8	3.2
Gross debt			111	108	104	101	98	95	92
Memorandum item
Nominal GDP (in billions of euros)			167	179	191	203	216	229	242

Source: Fund staff estimates and projections.

^{^1/}Assumes broadly constant ratio of revenue and primary expenditures to GDP as in 2005, and full utilization of EU structural funds.

Table 6.

Greece: Medium-Term Staff Policy (Adjustment) Scenario, 2002–10

(In percent of GDP)

Sources: National Statistical Service; Ministry of National Economy; and Fund staff estimates and projections.

Table 6.

Greece: Medium-Term Staff Policy (Adjustment) Scenario, 2002–10

(In percent of GDP)

		2002	2003	2004	2005	2006	2007	2008	2009	2010
					Proj.
Total revenues		43.3	42.5	41.6	41.1	42.5	42.1	42.3	42.6	42.9
Total expenditures		48.3	48.3	48.3	45.6	45.2	43.8	43.4	43.0	42.7
	Primary expenditures	42.0	42.5	42.6	40.4	40.3	38.9	38.6	38.4	38.3
	Interest expenditures	6.3	5.7	5.7	5.2	4.9	4.8	4.7	4.6	4.5
Overall balance		-4.9	-5.7	-6.6	-4.6	-2.7	-1.7	-1.1	-0.4	0.2
Primary balance		1.3	0.0	-0.9	0.7	2.2	3.2	3.7	4.2	4.6
Structural primary balance		1.3	-0.4	-1.7	0.0	1.7	2.8	3.4	4.0	4.6
Structural overall balance		-5.0	-6.1	-7.4	-5.2	-3.2	-2.1	-1.3	-0.6	0.1
Memorandum items:
Gross debt		112	109	111	108	104	99	94	89	84
Real GDP growth		3.8	4.6	4.7	3.5	3.3	3.2	3.2	3.1	3.0
Real primary spending growth		4.5	6.0	4.8	-1.8	3.0	-0.3	2.4	2.5	2.7
Real current primary spending growth		5.5	4.3	4.1	3.5	3.2	-0.9	2.6	3.6	3.3

Sources: National Statistical Service; Ministry of National Economy; and Fund staff estimates and projections.

Table 6.

Greece: Medium-Term Staff Policy (Adjustment) Scenario, 2002–10

(In percent of GDP)

		2002	2003	2004	2005	2006	2007	2008	2009	2010
					Proj.
Total revenues		43.3	42.5	41.6	41.1	42.5	42.1	42.3	42.6	42.9
Total expenditures		48.3	48.3	48.3	45.6	45.2	43.8	43.4	43.0	42.7
	Primary expenditures	42.0	42.5	42.6	40.4	40.3	38.9	38.6	38.4	38.3
	Interest expenditures	6.3	5.7	5.7	5.2	4.9	4.8	4.7	4.6	4.5
Overall balance		-4.9	-5.7	-6.6	-4.6	-2.7	-1.7	-1.1	-0.4	0.2
Primary balance		1.3	0.0	-0.9	0.7	2.2	3.2	3.7	4.2	4.6
Structural primary balance		1.3	-0.4	-1.7	0.0	1.7	2.8	3.4	4.0	4.6
Structural overall balance		-5.0	-6.1	-7.4	-5.2	-3.2	-2.1	-1.3	-0.6	0.1
Memorandum items:
Gross debt		112	109	111	108	104	99	94	89	84
Real GDP growth		3.8	4.6	4.7	3.5	3.3	3.2	3.2	3.1	3.0
Real primary spending growth		4.5	6.0	4.8	-1.8	3.0	-0.3	2.4	2.5	2.7
Real current primary spending growth		5.5	4.3	4.1	3.5	3.2	-0.9	2.6	3.6	3.3

Sources: National Statistical Service; Ministry of National Economy; and Fund staff estimates and projections.

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Greece: Staff Report for the 2005 Article IV Consultation

Author: International Monetary Fund

Volume/Issue:: Volume 2006: Issue 004

Publisher:: International Monetary Fund

ISBN:: 9781451816235

ISSN:: 1934-7685

Pages:: 60

DOI:: https://doi.org/10.5089/9781451816235.002

Keywords

Table 6.

Greece: Medium-Term Staff Policy (Adjustment) Scenario, 2002–10

(In percent of GDP)

		2002	2003	2004	2005	2006	2007	2008	2009	2010
					Proj.
Total revenues		43.3	42.5	41.6	41.1	42.5	42.1	42.3	42.6	42.9
Total expenditures		48.3	48.3	48.3	45.6	45.2	43.8	43.4	43.0	42.7
	Primary expenditures	42.0	42.5	42.6	40.4	40.3	38.9	38.6	38.4	38.3
	Interest expenditures	6.3	5.7	5.7	5.2	4.9	4.8	4.7	4.6	4.5
Overall balance		-4.9	-5.7	-6.6	-4.6	-2.7	-1.7	-1.1	-0.4	0.2
Primary balance		1.3	0.0	-0.9	0.7	2.2	3.2	3.7	4.2	4.6
Structural primary balance		1.3	-0.4	-1.7	0.0	1.7	2.8	3.4	4.0	4.6
Structural overall balance		-5.0	-6.1	-7.4	-5.2	-3.2	-2.1	-1.3	-0.6	0.1
Memorandum items:
Gross debt		112	109	111	108	104	99	94	89	84
Real GDP growth		3.8	4.6	4.7	3.5	3.3	3.2	3.2	3.1	3.0
Real primary spending growth		4.5	6.0	4.8	-1.8	3.0	-0.3	2.4	2.5	2.7
Real current primary spending growth		5.5	4.3	4.1	3.5	3.2	-0.9	2.6	3.6	3.3

Sources: National Statistical Service; Ministry of National Economy; and Fund staff estimates and projections.

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