The primary surplus is expected to be maintained at 2.1% of GDP until 2029, which is the time horizon of the Fund’s forecasts.
If interest on public debt is also taken into account, a general government budget deficit of 0.9% of GDP is forecast this year, rising gradually to 1.4% in 2029.
In the Eurozone as a whole, a primary deficit of 1.2% of GDP is expected this year, which will gradually decrease to 0.2% in 2029, while the overall fiscal deficit is projected to decrease from 3.5% to 2.3% of GDP, respectively.
Primary surpluses will allow Greece’s public debt to steadily decline over the coming years, with its level falling to 138.8% of GDP in 2029. In the same year, Eurozone public debt is projected to be slightly reduced to 87, 7% of GDP from 88.6% in 2023.
General government revenue is projected to decline gradually from 46.8% of GDP this year to 43.7% in 2029, while general government spending will decline from 47.7% of GDP to 45.1%, respectively.
Rising global debt
The IMF finds that fiscal policy has become more expansionary in 2023, after improving on the deficit and debt fronts in the previous two years, and is calling on countries to stick to fiscal adjustment as debt rises, in a year with elections in several countries.
“The global economic and financial outlook has improved over the past six months. Inflation has eased, financial conditions have eased and risks to the outlook are balanced. However, many countries continue to struggle with high public debt and high deficits, amid new challenges from high real interest rates and declining medium-term growth prospects,” the Fund notes.
Four years after the start of the pandemic, public spending, excluding interest payments, remained about 3 percentage points of GDP higher than pre-pandemic levels in advanced economies (excluding the US) and 2 percentage points higher in emerging economies (excluding of China).
Global public debt rose to 93% of GDP in 2023 and remained 9 percentage points higher than the pre-pandemic level.
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