Greece remains burdened by deep and persistent external imbalances, despite the optimism once surrounding its National Recovery and Resilience Plan (RRP), funded through the European Union’s Recovery and Resilience Facility. A new report from the International Monetary Fund paints a sobering picture: while the plan provides a critical opportunity to stabilize the country’s external position, its success is far from assured.
Titled "No Quick Fix: The Recovery and Resilience Plan and External Position in Greece", the IMF report warns that even with substantial investment and reform—amounting to roughly €36 billion, or 16% of Greek GDP—lasting improvements will depend heavily on the country’s ability to sustain disciplined and prudent macroeconomic policies.
The analysis argues that, if implemented effectively, the RRP could significantly raise public savings, leading to an improvement in Greece’s current account balance by as much as 2.6 percentage points of GDP over the next 15 years. Such a shift would help improve the country’s net international investment position, which, as of the end of 2023, stands as the worst in the Eurozone at a staggering -136% of GDP.
But the IMF also warns that the same investment-driven stimulus could backfire if it leads to a surge in private consumption and borrowing. Without careful management, the economic boost could simply fuel unsustainable growth patterns, with the benefits of EU funding ultimately lost in a haze of fiscal laxity and inflated expectations.
The report points to deeper structural issues that continue to limit Greece’s capacity to translate investment into long-term external stability. Among them are entrenched institutional weaknesses, a large shadow economy, and some of the lowest household savings rates in Europe.
In essence, the IMF concludes that the Recovery and Resilience Plan is an important opportunity for Greece—but not a magic solution. Without coordinated national efforts to tackle informality, improve fiscal performance, and strengthen private savings, the country's long-standing external vulnerabilities will likely endure.
