Athens Digest 30.09.2019

• IMF predicts 2-percent growth in 2019, 2020, recommends lower surplus for next year

Fund says government ‘faces uphill battle’ citing reform reversals and decries restoration of pension bonuses

Greece and European partners in a race against time to agree on 2020 fiscal gap by October 15

Fire kills two in Moria camp

Europe has an obligation to support Greece for stability’s sake, says Budget Commissioner Oettinger

Greek pupils below 15 underachieving in basic skills, EU study shows

# The IMF forecasts a growth of around 2-percent for the Greek economy in 2019 and 2020, according to the Staff Concluding Statement issued after the completion of a mission visit to Athens on Friday. The statement also said that the fiscal primary surplus for 2019 is expected to be in line with Greece’s 3.5 percent of GDP commitment to European partners, but recommended that the government and European partners “build consensus around a lower primary balance path” for 2020.

# Despite welcoming the growth friendly policies of the government, the Fund said it “faces an uphill battle,” citing delays and reform reversals that had a negative impact in 2018. It stressed that “the recent restoration of pre-crisis ‘pension bonuses’ should be reversed.” It added that any available fiscal space should be used to boost vulnerable social groups – the unemployed, young workers and low income households. This fiscal space could be created with a lowering of the income tax threshold.

# Meanwhile, Greece and its European partners have until October 15, when Athens will submit its 2020 draft budget to the European Commission, to reach an agreement regarding the fiscal gap of 2020. The proposal by the Greek side for electronic invoicing to broaden the tax basis and debt repayment schemes do not appear to have gained traction with creditors, as was evident at last Thursday’s euroworking group.

# A mother and her child lost their lives yesterday afternoon after a fire broke out in Lesvos’ Moria camp. The case is under investigation. The fire broke out in a container.

# Highlighting the significance of Greece to the bloc, Budget Commissioner Günther Oettinger stressed that Europe is “obliged” to support Greece as it is one of its outer borders and is located in a “geopolitically hot zone.” “If we don’t support Greece and do not ‘export’ stability through its borders, then we will ‘import’ instability which will work against all of us,” he said at an event held in his honor by the Greek-German Chamber of Industry and Commerce in Athens last week. Referring to the decision making process in Europe, he said the era of unanimity is over and that decisions should be made on the basis of majority to deliver immediate and effective solutions to critical issues, both economically and politically, otherwise it risks being squeezed between the US and China.

On Our Radar: Greek pupils below 15 underachieving in basic skills, EU study shows 
A third (32-percent) of Greek students aged 15 underachieve in basic studies, an EC study for 2018 has shown. The EU average for underachievers for the same age group was at 20 percent, according to the finds of Commission’s annual Education and Training Monitor which were published last Thursday. More specifically, 27.3-percent of 15-year-old Greek pupils under achieved in reading skills, while 35.8 did the same in math and 32.7-percent in the sciences. The rates for 2009 were better showing that the number of underachievers grew during Greece’s financial crisis.