IMF Urges Greece to Stay the Course on Reforms as Economy Gains Momentum

The IMF expects global energy prices to stabilize, helping headline inflation in Greece ease further.

The International Monetary Fund (IMF) has issued a broadly positive assessment of the Greek economy, while urging the government to stay

focused on structural reforms and fiscal discipline. In its annual country report released Monday, the Fund highlighted Greece’s solid growth trajectory, improved banking sector resilience, and fiscal progress—but also flagged the need for continued reform to sustain long-term stability and competitiveness.

The report projects Greece’s GDP will grow by 2.1% in 2025, driven primarily by investment linked to the European Union’s Recovery and Resilience Facility (NextGenerationEU). Private consumption is also expected to remain robust, supported by rising employment and household incomes.

According to the IMF, Greece is benefiting from a stable macroeconomic environment and a significant reduction in non-performing loans, now down to 3% of total banking assets. The country’s banks are reporting strong profitability and are strengthening their capital buffers, while liquidity and funding risks have declined.

The IMF expects global energy prices to stabilize, helping headline inflation in Greece ease further. However, core inflation—driven by rising wages and service costs—may persist for longer.

The Fund emphasized that while risks to growth appear balanced, inflation-related risks remain tilted to the upside. Potential headwinds include slower growth in key Eurozone economies, geopolitical tensions, and uncertainty over international economic policy. On the upside, Greece could unlock even stronger growth by accelerating structural reforms.

The IMF Executive Board commended Greece for its economic turnaround and significant reduction in its debt-to-GDP ratio, though it cautioned that public debt remains high. The Board emphasized the need for a carefully calibrated policy mix, continued primary budget surpluses above 2% of GDP, and a gradual shift away from reliance on EU recovery funds.
The report also underlined the importance of targeted public investment—particularly in green energy and energy security—and called for more efficient social spending and tighter control over pension and public sector wage costs.

To enhance long-term competitiveness, the IMF encouraged further action to remove supply-side bottlenecks, increase workforce participation (especially among women), and improve labor skills. It also called for reducing bureaucratic hurdles and easing market entry barriers, especially in the services sector.

The Fund acknowledged progress in judicial reforms and noted their importance in resolving non-performing loans and boosting investor confidence. It also advised Greek banks to use their strong profits to reinforce capital reserves and prepare for future risks, especially as credit expansion accelerates.

Responding to the report, Greece’s Minister of National Economy and Finance, Kyriakos Pierakakis, emphasized the IMF’s recognition of Greece’s positive trajectory:

«At a time of global uncertainty, the IMF’s report confirms the strong momentum of the Greek economy and highlights the country’s role as a source of stability. It recognizes our significant progress and reinforces our commitment to responsible economic management».

Pierakakis pointed to rising investment, declining unemployment, and income growth as key drivers of improved living standards in the coming years. He noted the rapid recovery of Greece’s banking sector and the country’s success in reducing tax evasion and modernizing public administration since 2019.

«We remain firmly committed to fiscal stability», he said. «At the same time, we acknowledge the areas where we must go further—such as boosting labor participation, especially among women, and increasing productivity and investment».

Pierakakis concluded by reaffirming the government’s determination to press ahead with reforms:

«Our economic strategy will remain fast-moving and effective, aiming to deliver real improvements in the lives of all Greeks through genuine convergence with Europe».

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