BREAKING NEWS

Greece to unveil painful 2016 draft budget

By REUTERS

OCTOBER 5, 2015 06:18

ATHENS - Greece will unveil a painful 2016 draft budget on Monday meant to satisfy international creditors, projecting the economy will stay in recession next year before returning to growth in 2017, in line with the estimates by the country's lenders.

After seven months of heated negotiations with its EU/IMF creditors, Athens agreed in July to implement spending cuts and economic reforms in exchange for an 86 billion euro bailout that kept it in the euro zone under strict supervision.

Although government officials have expressed optimism that the recession this year will be milder than projected in the bailout program, due to an increase in tourism revenues and stronger than expected first-half data, any change in the economic forecasts will only come later.

The debt-ridden economy is officially expected to shrink by 2.3 percent this year and 0.5 percent in 2016. Public debt is seen rising to 196 percent of gross domestic product in 2015 and peak at 201 percent in 2016, including the new loans.

"The main targets of the draft budget will not differ from the estimates in the bailout," a finance ministry official told Reuters.

"Our estimate is for a shallower recession this year and that might be reflected in the final budget that will be submitted to parliament in November, after the first review of the new program," the official said.

The bailout projects a 0.25 percent primary budget deficit before debt service this year and a surplus of 0.5 percent next year. Greece is meant to achieve a primary surplus of 3.5 percent of GDP a year from 2018 under the August deal.

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