Greek Parliament’s Budget Office issued its quarterly report on Monday. The report signals a warning regarding the explosion of Greece’s private debt that is nearing the levels of public debt in the country. The report states: “Without a doubt, the situation is critical. But nobody in their right mind would want efforts for the country to exit the crisis to flounder right now, as has been agreed in the third bailout (reviewed in June).”
The report noted an increase of private debt to banks due to a growth in non-performing loans (NPLs), to the tax office (1.1 billion euros per month on average in the first eight months of 2016), to insurance funds (25 billion euros), and even to the Public Power Corporation (PPC at 0.67 percent). The dimension is such that private debt (overdue debts to banks, the public sector and insurance funds) are approaching dangerous levels near those of public debt.
The quarterly report also referred to growth with the government and the Bank of Greece expecting a 2.7 percent spike in the GDP in 2017. The IMF, however, notes that the data does not allow for a great deal of optimism with different estimations by private groups showing different results.
Over the next few months, the report notes that there will be a downward review of primary surplus targets and a conclusive decision on debt relief. Both the government and opposition parties agree on the need for debt restructuring, and they are backed in this by the IMF.
The report also referred to factors thwarting growth such as bureaucracy, access to funding for businesses, high tax rates and frequent changes in legislation.