Greece faces two years of recession amid sharp budget cuts and overhauls that creditors demanded in exchange for an 86 billion euro (US$95 billion) bailout, the Wall Street Journal reported, citing European Union officials.
The country’s economy is expected to shrink 2.3 percent this year and 1.3 percent in 2016, the officials said, citing the latest estimates from the institutions that have been negotiating Greece’s new aid program.
After that, it is expected to return to growth, probably expanding by 2.7 percent in 2017 and 3.1 percent in 2018.
EU officials released the figures Wednesday after the Greek government and the bailout institutions—the European Commission, the European Central Bank and the International Monetary Fund—agreed on a 29-page document that sets out budget cuts and overhauls to be implemented over the next three years.
Greek Prime Minister Alexis Tsipras expressed confidence that the bailout deal will be completed.
“Despite the obstacles and trip-ups that some are attempting to put in our path, I am optimistic that we will reach an agreement that will bring an end to economic uncertainty,” he said.
Under the program, Greece would have to limit its primary deficit, which doesn’t include interest payments, to 0.25 percent of gross domestic product this year.
Without the new measures, Greece would have had a primary deficit of 1.5 percent of GDP this year, according to the document seen by the Journal.
By 2016, it would be expected to meet a primary-surplus target of 0.5 percent, followed by a 1.75 percent primary surplus in 2017.
From 2018 onward, the agreement calls for the government to produce a 3.5 percent primary surplus every year, the newspaper said.
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