new ones, yields have fallen substantially ( especially on shorter - term notes ). last week and despite market turbulence greece issued a seven - year bond through which it borrowed €3 billion at a yield of 3. 5 %. moreover, yields on corporate bonds fell, while share prices rose, reflecting a gradual recovery of investor confidence in connection with steady progress in the implementation of the economic adjustment programme. on the fiscal front, in january - november 2017, the general government cash primary surplus improved, reaching 4. 0 % of gdp, compared to 3. 7 % of gdp in the same period last year. based on the above, the incoming esa - 2010 data and the execution of the 2017 state budget, the 2017 primary balance target of 1. 75 % of gdp is expected to be reached with a significant margin. for 2018 the primary balance target of 3. 5 % of gdp is considered achievable. according to bank of greece estimates, economic activity is expected to pick up in the medium term, with gdp growing by 1. 6 %, 2. 4 % and 2. 5 % in 2017, 2018 and 2019, respectively. growth is projected to accelerate in 2018 and 2019, supported by exports, private consumption and investment. consumption is expected to recover, primarily on the back of higher household real disposable income as a result of increased employment. the contribution of investment is expected to be positive, mainly due to stronger business investment, reflecting the gradual restoration of confidence and liquidity in the financial system, as well as the acceleration of privatisations. exports are expected to remain robust, reflecting higher foreign demand and the restoration of international competiveness. 4. risks and challenges the above forecasts are based on the assumption that the reform and privatization programme will be implemented smoothly and according to the agreed time schedule. the recovery of the economy remains fragile and subject to risks and vulnerabilities, both internal and external. delays or backtracking on reforms would weaken the positive outlook and impact negatively on investors ’ confidence in the future course of the greek economy. therefore, economic policy should remain focused on the implementation of the remaining programme measures and the preparation for the timely conclusion of the fourth and final review, which will mark the end of the esm programme. there are also external risks to the forecast, which are linked, among other things, to the sudden increase in investors ’ risk aversion due to disturbances in international financial markets ( such as the recent mini

esm programme. under the eu legal framework, greece will be under surveillance at least until it repays 75 % of the official loans received from euro area countries, the european financial stability facility ( efsf ) and the european stability mechanism ( esm ). therefore, it remains to be clarified first, the form of supervision in the conduct of economic policy and, second, whether and on what conditions precautionary financial support from the partners will be available after the completion of this program. according to the bank of greece, such a precautionary support framework could assist the greek economy by further driving down borrowing costs, as it will provide assurance of greece ’ s access to financing after the end of the programme in august 2018, especially if international financial market conditions deteriorate. it will also allow the ecb to maintain the waiver on greek government bonds after the end of the programme and eventually include greek government bonds in its asset purchase programme in the normal or / and in the reinvestment period. maintaining the waiver is, in the bank of greece ’ s view, important for the smooth financing of greek banks as long as greece ’ s credit rating remains lower than investment grade, as even repo operations are facilitated by the waiver. * * * the ongoing reform and fiscal adjustment effort is bearing fruits. the macroeconomic imbalances have now been corrected, important and long - needed reforms have been implemented, competitiveness has improved and the banking sector is adequately capitalized. the economy is recovering. however, we still have some way to go in order for greece to tap the financial markets on sustainable terms after the end of the programme in august 2018. i am confident that the actions i have just described will improve greece ’ s creditworthiness, boost the investment and business climate, facilitate the return to financial normality, and will contribute to the sustainable recovery of the economy after many years of recession and stagnation. sources : bank of greece ( 2017 ), the bank of greece interim report on monetary policy 2017, december. www. bankofgreece. gr / bogattachments / inter _ nompol2017. pdf masuch, k., moshammer, e. and pierluigi, b. ( 2016 ) : institutions and growth in europe ”, ceps working document no 421. oecd, 2016, greece, oecd economic surveys, paris. stournaras, y. ( 2017