Sun, Jul 01, 2018 - Page 16 News List

Greek economy improved, but needs more relief: IMF


Greece has significantly improved its economy as it heads toward the end of its bailout program next month, but its debt would remain difficult to manage in the long term, the IMF said on Friday.

The country would emerge from its bailout “having largely eliminated macroeconomic imbalances,” the IMF said, but added that growth was still hampered by “significant crisis legacies and an unfinished reform program.”

The finance ministers of the 19-nation eurozone last week agreed to grant Greece a 10-year extension to the repayment of loans, as well as to release a last batch of bailout loans worth 15 billion euros (US$17 billion). In return, Greece has agreed to run primary surpluses — a budget surplus when excluding the cost of financing debt — until 2060.

Greece’s debt stands at about 180 percent of its GDP.

The debt deal “significantly improved debt sustainability over the medium term, but longer-term prospects remain uncertain,” the IMF said.

The debt relief deal appeared based on “very ambitious assumptions” about economic growth and the ability to run large primary surpluses, the IMF said, adding that it could be difficult for Greece to remain financially independent without further debt relief.

The eurozone has said it could provide further debt relief if necessary, which the IMF welcomed.

However, it was “critically important that any such additional relief be contingent on realistic assumptions, in particular about Greece’s ability to sustain exceptionally high primary surpluses,” it said.

It also said Greece’s budget targets would require high taxation, limiting spending and investment.

Greece has depended on rescue loans since 2010, gripped by a financial crisis that twice saw it almost crash out of the European joint currency. In return, Greek governments have overhauled the pension and social security systems, raised taxes and slashed spending.

The IMF stressed the need to protect the independence of the country’s statistical authority.

In a highly politicized case, one of the country’s former statistics chief, Andreas Georgiou, has been fighting court battles over accusations he deliberately inflated budget deficit data.

However, he took over the statistical agency months after Greece had revised previously misreported budget deficit data and was spiraling into financial crisis.

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