Sun, Dec 19, 2010 - Page 11 News List

IMF releases Greek loan, warns about crippling growth

NO PAIN, NO GAIN:The IMF has said that Greece’s tough reforms were already paying dividends, citing falling inflation rates and improving competitiveness

AFP, WASHINGTON

The IMF on Friday released a 2.5 billion euro (US$3.3 billion) loan for Greece, as it warned of yet more economic pain ahead for the debt-ravaged nation.

Amid a brutal recession, sky-high borrowing costs and draconian budget savings, the IMF said growth would slow to a crippling minus-3 percent next year.

The economy had been expected to contract by a marginally less painful 2.5 percent.

As part of efforts to avoid the country falling into default, the IMF approved the disbursement, worth about US$3.3 billion, bringing total IMF emergency loans to Greece to 10.58 billion euros.

The loan is part of an EU and IMF 110 billion euro loan approved in May that rescued the nation from bankruptcy.

As a condition of the loan, Athens has embarked on a series of dramatic spending cuts.

GOOD ORDER

After reviewing Greece’s moves to slash its deficit, the IMF said reforms were beginning to put the books back into good order.

“The Greek authorities are to be commended for their determined implementation of difficult and ambitious macroeconomic policies and structural reforms,” senior IMF official Murilo Portugal said.

“Inflation is falling and competitiveness improving,” he said, adding that the “overall fiscal adjustment to date has been impressive.”

But it has not been without pain.

SOCIAL UNREST

The country has been rocked by strikes and demonstrations that have paralyzed transport networks and occasionally turned violent.

Earlier this week protesters assaulted an ex-minister and clashed with riot police as thousands joined street demonstrations during a general strike.

Hours after parliament approved another batch of wage cuts, this time in the country’s inefficient public utilities, the center of the Greek capital was left scarred with debris and the heavy smell of tear gas and smoke.

There may be more to come.

The IMF warned that Athens must accelerate structural reforms, including to the labor market, the tourism trade and the retail sector.

The Greek government last week gave the green light to a three-year privatization plan to raise 7 billion euros through the sale and exploitation of state companies and other assets.

The finance ministry said the Socialist government intended to draw “at least 1 billion euros” next year from the partial sale, joint management or outright privatization of hundreds of properties.

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