The only Grexit scenario that is currently on the table is the one from the bailout programme, Angel Gurría, the Secretary-General of the Organisation for Economic Co-operation and Development (OECD), said on Monday (30 April).
“The foundations for a sustainable and fair growth have been laid, also in the long run,” Gurría emphasised at a meeting with Greek Premier Alexis Tsipras in Athens.
He also praised the leftist prime minister who “brought Greece back from the edge of the cliff”.
In its Economic Survey of Greece 2018, OECD confirms the recovery of the Greek economy and forecasts a 2% growth in 2018 and another 2.3% in 2019, with the main drivers the investments, exports and increasing private consumption.
“We are in a situation where growth could be underestimated in the evidence that we currently have. In the longer term, we may eventually reach a more sustainable level of sustainability. You are ready to jump.”
As far as the primary surplus targets are concerned, OECD noted that Greece would reach and even exceed the objectives of the ESM program by 2019.
In particular, it sets the bar lower by 2017, projecting a 3.7% primary surplus of the GDP, which will reach 4% in 2018 and 3.6% in 2019.
At the same time, it projects steadily declining unemployment, which is expected to fall from 21.5% in 2017 to 20.4% in 2018 and to 19.4% in 2019.
As far as the debt issue is concerned, OECD noted that despite the consistency that Greece has shown in promoting reforms and meeting high fiscal targets, its public debt that has reached 180% of GDP remains among the highest in the world.
The report points out that while the primary objective should be maintaining the fiscal stability and sustaining high growth rates, measures to alleviate Greek debt should, in any case, be made to make its repayment viable.
The report is also positive about the changes in tax administration and spending management, but highlights the need to increase the rate of revenue collection as “two out three euros from VAT are lost due to tax evasion”.
Among the future challenges for the Greek economy, OECD emphasised the “reforms’ fatigue”, the geopolitical tensions in the Mediterranean that could increase the flow of immigrants, as well as a potential financial crisis – not created by Greece – that could lead to a need to recapitalise major Greek bank, which the private sector will not have the will to cover.
“The Greek economy does not need any additional burdening measures but a well-prepared plan to pursue reforms and relieve the economy in order to create room for further growth,” Alexis Tsipras said.
On 27 April, the Greek government presented its own growth strategy for the post-bailout era, which, according to Bloomberg, focuses on the implementation of structural reforms that have been delayed for years, such as the creation of the Land Registry and the speedier administration of justice decisions.
The country’s lenders and the EU institutions have said that Greece is exiting the bailout in August, after almost 9 years of crisis.
Opposition asks for snap elections
Meanwhile, the main opposition centre-right New Democracy party does not share the government’s optimism and calls for a snap national election.
The government’s mandate ends in 2019 and it has repeatedly said that it would serve its full term.
“If Mr Tsipras really believes, as he claims, that he is successfully closing a chapter for the country in August, let him hold elections in September,” New Democracy said in a statement.
On the other hand, the government says that the only ones who do not see the country’s progress are the New Democracy lawmakers and urges the EPP affiliate to see the reality.
New Democracy has also stressed that it would not commit to the government growth plan if it came to power.
However, the business community does not positively view either the call for a snap election or the lack of consensus on the growth plan.
“The discussion about early elections must come to an end as it causes turmoil in the economy and in society,” said Konstantinos Michalos, president of the Athens Chamber of Commerce and Industry and deputy president of the Association of European Chambers of Commerce and Industry (Eurochambres).
Michalos, who is known for his centre-right political beliefs, continued by saying those who demand an election when there is a national crisis “do not seem to be talking to the ones they have to [business community]”.