Greece slashes economic growth forecast again in latest reform plan

[May 09, 2015]  ATHENS (Reuters) - Greece expects its economy to grow at little more than a third of the pace it originally targeted in its 2015 budget, a reform plan drafted by the finance ministry and released on Saturday suggested, raising fresh questions about its bailout.

The government forecast economic growth at more than 0.8 percent this year, well below the 1.4 percent it estimated in a list sent to its international lenders in March and far off the 2.9 percent assumed in budget planning late last year.

Prime Minister Alexis Tsipras left-led government, elected in January on a promise to ease the belt-tightening terms of the bailout, has been locked for months in talks with Greece's official creditors over a list of reforms to unlock funds.

The 89-page plan appeared to be a broader outline of initiatives the government plans to take over the long term, rather than a specific list of reforms to secure financial aid immediately from the European Union and International Monetary Fund.

The government said that lower-than-expected revenues in 2014 and uncertainty over funding had complicated the economic projection.

"However, it's estimated that favorable conditions for the Greek economy will be maintained. Indicatively, the GDP rate in 2015 is expected to exceed the 0.8 percent noted in 2014," it said.

Greece emerged last year from a deep, austerity-induced recession that shrank its gross domestic product by a quarter over a six-year period, slashing jobs and eroding living standards.

The reform plan which was drafted in April outlines major changes such as reinstating collective bargaining, boosting employment, and cracking down on undeclared labor, bureaucracy and corruption. It does not include primary budget surplus estimates or growth projections for the coming years.

The European Commission this week slashed its 2015 Greek GDP estimate from 2.5 percent to 0.5 percent because of the uncertainty that has dogged its policy direction since late 2014.

Greece's IOBE think-tank revised down its growth forecast this year, predicting 1.0 percent economic expansion, down from 2.3 percent forecast in January.

Euro zone finance ministers are expected to assess any progress made in talks between Athens and its lenders on Monday.

(Reporting by Lefteris Papadimas; Writing by Renee Maltezou; Editing by Ruth Pitchford)

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