Greece slashes GDP forecast in new budget plans

Angela Merkel is unwilling to make concessions to Greece ahead of Germany's general elections. [European Union]

The Greek government on Sunday (14 May) slashed its GDP growth forecast for 2017 as it moved towards submitting new austerity measures, including a wider tax net, for approval by lawmakers.

The government lowered the GDP growth target for the year to 1.8% from a previous estimate of 2.7%, the state news agency ANA reported.

The latest estimate also falls short of the European Commission’s projection of 2.1% growth, set in February.

The downward revision appeared in the government’s budget proposal for 2017-2021, handed to parliament on Saturday night, along with a bill proposing a tighter budget, ANA said.

Greece is seeking to meet the demands of creditors in an arduous bailout process, with a proposed new law projecting tax increases for 2019 and 2020, even for income just above the poverty level.

Greece, lenders reach long-awaited deal on bailout reforms

Greece and its foreign creditors reached a deal early today (2 May) on a package of bailout-mandated reforms, Greek Finance Minister Euclid Tsakalotos said, paving the way for the disbursement of further rescue funds.

That along with pension cuts – for the 14th time since the beginning of the crisis – is projected to save €4.5 billion, according to ANA.

Part of a July 2015 bailout deal with the EU and IMF to provide debt relief for the country, the new proposals are set for adoption on Thursday night, according to the parliamentary officials.

Lagging in the polls for being seen as caving to creditor demands, Prime Minister Alexis Tsipras will need full backing from his small majority of 153 out of 300 seats in parliament.

The right-wing opposition has said it will vote against the programme.

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The British exit from the European Union will have consequences for the Greek economy, especially on tourism, Deputy Minister of Foreign Affairs George Katrougalos said on Monday (8 May).

During negotiations with creditors, Tsipras managed to secure some measures against poverty, such as cafeterias to serve free meals, day care and rent subsidies.

But the country’s main unions called for a national general strike on Wednesday.

Tsipras had pledged his government would not implement new austerity measures without debt reduction in exchange.

The question has served as a point of contention between the IMF and Berlin for months.

IMF says EU still needs 'credible' debt relief for Greece

Despite an agreement reached Tuesday (2 May) on a reform package, Europe still needs to provide “credible” debt relief to Greece before the International Monetary Fund can provide more financing, an IMF official said.

In his calls for substantial debt relief, Tsipras faces resistance from Germany, where additional concessions are unpopular with an electorate called to a general election in September.

According to sources familiar with the matter, the IMF and eurozone countries are close to reaching a compromise, which would clear the way for a global agreement allowing Greece to return to bond markets in 2018.