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Greece’s debt is sustainable despite peak linked to pandemic

ATHENS, Greece: The International Monetary Fund said on Monday that Greece’s huge public debt remains sustainable over the medium term despite unprecedented uncertainty in all sectors of the economy due to the pandemic.

After the completion of a new round of follow-up talks with Athens, the IMF said Greece’s economy is expected to contract 9.5% this year before rising 5.7% in 2021. Public debt will reach a record 208% of gross domestic product this year before declining to 199% in 2021 from an already high level of 181% in 2019.

The IMF, in collaboration with European creditors of Greece’s bailout, continues to monitor the economy beyond the end of the acute financial crisis of 2010-2018 and the bailout loan program that has kept the country on hold. afloat after losing access to international markets.

He said the medium-term economic recovery would be supported by a pickup in private consumption, investments linked to privatization and the first rounds of subsidies (from the European Union), and higher merchandise exports.

The IMF added that the increase in public debt vulnerabilities would be mitigated by EU funds and the government’s large liquidity reserve, which would translate into adequate repayment capacity.

He said the pandemic brings unprecedented uncertainty and downside risks to all sectors of the economy, amplified by Greece’s legacy of crisis.

The main risks stem from a protracted pandemic that would derail the expected rebound in tourism and a significant deterioration in bank balance sheets, the IMF said.

Tourism accounts for up to a fifth of the Greek economy, but has been hampered by the pandemic this year.

Monday’s statement also praised the Greek government for its response to the pandemic, which it said has been swift, significant and appropriately targeted at hard-hit households and businesses.

Also on Monday, creditors of the EU bailout for Greece approved the release of an additional 767 million euros ($ 916 million) in Athens debt relief measures.

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