By Stelios Bouras, Dow Jones
Greece’s economy is expected to keep contracting until at least until 2017, according to a draft budget that anticipates the implementation of the next round of austerity demanded by lenders.
In a 49-page document submitted to Parliament on Monday, the budget predicts that Greece’s recession this year will result in a 2.3% contraction it its economy, and another 1.3% in 2016. The figures are in line with forecasts included in the country’s third bailout deal, agreed upon in July with eurozone nations and the International Monetary Fund.
The tax increases and spending cuts in that agreement mean that Greece is targeting a primary budget deficit of 0.25% of economic output for this year before swinging to a surplus of 0.5% in 2016.
“In the period coming up, the Greek economy will enter a procedure of significant reforms with a series of fiscal and structural changes,” said an introductory note in the budget. “The adjustment period will not be easy but will create the conditions for a modern Greek economy free of problems inherited from the past.”
The rolling out of more belt tightening on an austerity-weary public is set to be a challenging task for the coalition government headed by Prime Minister Alexis Tsipras despite his having a fresh mandate after winning last month’s elections. The unemployment rate in Greece is seen inching higher next year to 25.8% from 25.4% this year, according to the budget.
Greek officials hope to soften some of the terms included in the country’s rescue deal in negotiations with lenders that are expected to resume in the coming weeks.
Dow Jones Newswires
