A high-profile warning by the Greek Parliament’s independent Budget Office on Tuesday that the country’s economy remains unstable and risks entering another recessionary phase caused reverberations hours after a preliminary agreement was announced between the leftist Greek government and its institutional creditors.
On Wednesday morning, for instance, the phrase “surprise and annoyance” was circulated by unnamed circles reportedly expressing the views of Parliament President Nikos Voutsis, a top lawmaker elected with ruling SYRIZA party.
The same sources claimed that the release of the regular three-month report by the Budget Office negatively coincided with the fillip enjoyed by the Athens Stock Exchange (ASE) and falling Greek bond spreads, in the wake of Tuesday’s announcement of the agreement.
Parliament’s Budget Office maintained, among others, that a forecast of a 2.7-percent increase in Greece’s GDP for 2017, which was included in the tabled budget for the year, “now appears improbable”. The same independent entity said the Greek economy’s overall image was disappointing.
Specific factors cited by the Budget Office included pressure on private consumption, low investment rates, an inability on the part of the exports sector to act as an “economic locomotive” for the Greek economy and an increase in arrears by the private sector to the state.
These factors “… contrast with the expectations that were invested in the current memorandum, and as such, can lead to a complete overturning of (current) data with unforeseen consequences.”
Moreover, in echoing much of the criticism aimed at the current government, including by creditors, the Budget Office said the “disappointing image” of the Greek economy is based on a handful of mistakes, such as abolishing a law that would have broken up the dominant state-run power company, delays in implementing social policy and privatizations, managing the “mountain” of non-performing loans plaguing the domestic credit system as well as tax reforms.
