By Vassilis Kostoulas
[email protected]
Τhe head of the Hellenic Fiscal Council (HFisc), an independent authority established in 2014, is the latest high-ranking official to revise the forecast for the Greek economy in 2017 downwards.
HFisc president Panagiotis Korliras said he forecasts an annual growth rate for the crisis-battered country at 1.5 percent, down from the initial 2.7-percent prediction and even a subsequent 1.8 forecast, which he previously said was more realistic.
The reasons are the major delay in concluding the second review of the current bailout program and the economic uncertainty caused by the negative economic performance in the last quarter of 2016. The major risk, as he warned, is that the economy, after eight years of recession, will remain stagnant.
The lack of growth will, predictably, affect the sustainability of the Greek debt, another complicated matter being debated by Greece’s creditors over the past year and a half.
Conversely, Korliras echoed the consensus across much of the Euro zone last week, namely, that a positive decision on the Greek issue will arise from Thursday’s Eurogroup meeting, “assuming that certain verbal adjustments are made over the debt (issue), so that something is presented that at least looks better than what he had in May.”
Moreover, he reminded that the debt issue has been upgraded mainly on the domestic political front, “although it’s not pressing, as we all know.”
HFisc has underlined that the European Central Bank (ECB) could determine that the Greek debt was sustainable if it forecasts an average annual growth rate for Greece of 3 percent and combined this model with low interest rates.
Finally, he said it was not unrealistic for Greece to return to the markets for its borrowing needs in 2018 with costs of 3 to 5 percent, on par with the rates in which Portugal currently borrows.
The HFisc was established via a memorandum-mandated law in 2014 and commenced activity following the appointment of the first board of directors in November 2015.
All public sector entities in Greece are legal obligated to provide data as requested and to assist the independent authority, which reports to the Greek Parliament when requested or when required before a parliamentary committee.
Additionally, after 2018 the HFisc is tasked with approving the draft budget before the latter is submitted to Parliament for ratification.
