On 31 March 2022 the IMF published a report following discussions with Greece under Article IV of the IMF’s articles of agreement.

The economy has recovered strongly from the recession in 2020 caused by the pandemic; and output recovered to its previous level in 2021. The economic recovery was helped by a fast resumption of the tourist industry, increased private consumption and strong private investment. Foreign direct investment has also increased. Greece has continued to make reforms in a number of areas such as digitization, privatization, and improvements to fiscal policy.

The IMF expects strong economic growth to continue despite geopolitical tensions and the war in Ukraine. There may however be a negative impact on growth through the effect of the war on some of Greece’s trading partners and through higher inflation, resulting in projected growth of around 3.5% in 2022.

There are downside risks from energy shortages due to the war and the possibility of new waves of Covid infections. Fiscal adjustment in the medium term could be threatened by spending pressures and unfunded tax cuts which could increase public debt.

Support during the pandemic

The IMF considers that the temporary measures to support households and businesses during the pandemic should be phased out by the end of 2022. Support measures to help with the high energy prices should be temporary and they should be targeted at vulnerable groups, with a gradual pass-through of higher prices to consumers. Greece should give priority to correcting the gaps in the coverage by the Guaranteed Minimum Income scheme and raising benefit levels at least in line with inflation.

Tax and other measures

The IMF considers that the government plans for cuts in social security contributions and in the solidarity tax should be reversed, as they are poorly targeted, placing a burden on future generations; or at least they should be fully funded through benefit adjustments and base broadening measures. Fuel subsidies and transfers to public enterprises should be phased out over the medium term and the government should take measures to combat tax evasion by the self-employed.

Recovery and Resilience Plan

The government has drawn up a Recovery and Resilience Plan to guide reforms, but implementation of the plan is important for enhancing digital skills and aligning vocational education and training with the requirements of the labour market.

Carbon tax

The draft Climate Law would be supported by a substantial increase in green investment, but a strong social safety net is important to protect vulnerable social groups. Greece should consider introducing a new carbon tax and increasing it gradually, to finance green investment.