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BRUSSELS (Reuters) - Greece will meet its primary surplus target of 3.5 percent of gross domestic product next year in line with its bailout commitments, the European Commission forecast on Monday.
The size of next year's primary surplus - the budget balance before debt-servicing costs - is in contention between euro zone governments and the International Monetary Fund, which believes the surplus will be only 1.5 percent.
A further disagreement between the two lenders to Greece is over what surplus Athens will be able to maintain in the years after 2018. The higher the surplus and the longer it is kept the less is the need for any further debt relief to Greece.
The IMF insists Greek debt, which the Commission forecast on Monday would fall to 177.2 percent of GDP this year from 179.7 percent in 2016 and then decline again to 170.6 percent in 2018, is unsustainably high and that Greece must get debt relief.
Germany and several other euro zone countries say that if Greece does all the agreed reforms then debt relief will not be necessary.
In a table of predictions of the primary balance for all 28 countries of the European Union calculated under a system used by the European statistics office, the Commission forecast Greece would have a primary surplus of 3.7 percent in 2018.
This would be better than the 3.5 percent primary surplus agreed under the bailout.
But a Commission spokeswoman said that forecast was calculated slightly differently than the primary surplus for the purposes of the bailout, which excludes transfers of profits made by national central banks on Greek bond portfolios back to Athens.
The bailout primary surplus calculations also exclude the sale of non-financial assets such as land, buildings, leases, concessions or licenses that are treated as sales of non-financial assets and recorded as one-off transaction.
"Greece is forecast to meet its primary surplus programme target in 2017 and 2018," European Commissioner for Economic and Financial Affairs Pierre Moscovici told a news conference.
The Commission forecast that Greek investment would triple to 12 percent of GDP this year and rise further to 14.2 percent of GDP next year as the economy expands 2.7 percent in 2017 and 3.1 percent in 2018 after years of recession.
It also forecast Greek unemployment would fall to 22 percent of the workforce this year from 23.4 percent last year and decline further to 20.3 percent in 2018.
Reporting By Jan Strupczewski; editing by Philip Blenkinsop/Jeremy Gaunt