For Greece, the Outlook Is Still Grim

Greece’s most recent bailout agreement was based on two assumptions: that the private sector would voluntarily accept at least a 50 percent loss on its debt, and that these savings, together with other changes to be undertaken by the government, would bring Greece’s debt down to 120 percent of G.D.P. by 2020.

But the new I.M.F. forecast for Greece presents the disturbing prospect that even after years of spending cuts and tax increases, Greece will have a debt burden in 2020 that is not sufficiently lower than its current load.

The fund’s gloomier outlook has been influenced by three primary factors, bankers and officials say. One is the economic slump within the entire euro currency region that I.M.F. economists are forecasting for 2012, a problem that economists refer to as an external shock for Greece beyond its control.

But the other two elements stem from the nation’s continuing difficulty in meeting targets set for it by the European Union and the I.M.F.

The second element is Greece’s budget deficit, for which a target had been set at no more than 8 percent of G.D.P. for 2011. Economists now estimate that the actual deficit number was around 10 percent, because of weak tax collection and continued high spending within the public sector.

The third factor is the new Greek government’s continued difficulty in passing legislation that would lead to the long-term economic change its European rescuers are demanding. This week, for example, Greek legislators rejected a proposed law that would have forced the nation’s pharmacies — long seen as a symbol of the protected and uncompetitive local economy — to stay open more hours each day.

Although the Greek Parliament did pass other laws that liberalized areas of the economy, the defeat of the pharmacy bill, and continuing union opposition to government demands for lower wages, underscore how difficult it will be for Greece to return to a path of economic growth.