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The Journal Gazette

Friday, January 18, 2013 1:25 pm

IMF: Greece recovering, needs more EU cash


Greece has salvaged its economic recovery program following months of political uncertainty but still faces "enormous" challenges and will need new financial support from fellow eurozone states, the International Monetary Fund said Friday.

The IMF issued its views in a 260-page report after it approved this week a long-delayed $4.3 billion loan installment to Greece.

Poul Thomsen, headed of the IMF's mission to Greece, said the government's implementation of its reforms program had rapidly improved since earlier in 2012, when it was delayed by two inconclusive elections.

"The political situation in Greece ... had thrown the program significantly off track to the extent that there was a standstill in implementation (of reforms)," Thomsen said, speaking to reporters on a conference call from Washington D.C.

"The government has worked determinedly on catching up and ... I am glad to conclude that the program is back on track."

Conservative Prime Minister Antonis Samaras formed a coalition government following general elections in June last year, ending seven months of political uncertainty after the previous Socialist government agreed to form an interim alliance to guarantee continued payment of bailout loans and the future of the country in the euro bloc.

The Samaras government pushed through a major new round of austerity measures to lower the public deficit and debt. The measures, however, have also been hurting the economy and eroding standards of life - the Greek economy is expected to contract for a sixth consecutive year in 2013 and poverty and unemployment are swelling at an alarming rate.

The IMF said that despite the improvements, it still expects Greece to face a financing shortfall of between (EURO)5.5 billion and (EURO)9.5 billion ($7.3 billion and 12.7 billion) in the years 2015-16.

It recommended that fellow eurozone states, which now hold most of Greece's debt, write off some of the loans. It also suggested that the states again lower the interest rates they charge Athens for the money.

The IMF said the main threats to Greece's recovery were poor tax collection, insufficient implementation of some long-term reforms, and enduring political uncertainty. It added that Athens should even consider replacing current managers with "foreign experts" to revive its troubled privatization program.

Using unusually blunt wording, it said growing public support for Syriza, the leftist main opposition party, and other parties that want to reject the bailout program kept the country at risk of "complete political failure" and a potential eurozone exit.

Syriza angrily responded to the remark.

"It's not the first time the IMF has intervened in the internal affairs of a country in such an undignified manner," party lawmaker Efklidis Tsakalotos said. "It has learned nothing from the failures and social disasters that has caused around the world."


Elena Becatoros contributed to this report.



IMF report: