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Greece finance minister rejects IMF findings on economy

Finance Minister Euclid Tsakalotos has said an IMF report on the Greek economy 'fails to do justice' to the country's potential. The Athens government remains deadlocked with lenders over its multibillion debt bailout.

Tsakalotos insisted Greece was moving "to a state of solid economic recovery," in a letter responding to the International Monetary Fund's (IMF) latest assessment on the debt-laden country's economy.

The Greek finance minister took issue with the fund's long-delayed analysis, which suggested that Athens is relying on overly optimistic calculations for its growth and budget estimates.

Lender not convinced

While the IMF acknowledges that the Greek economy should grow about 2.7 percent this year after just 0.4 percent in 2016, it disputes whether Greece can deliver a primary balance, or budget surplus before debt repayments, of 3.5 percent of GDP.

That figure is far in excess of the 1.5 percent the IMF believes is feasible.

"Reaching and sustaining such a high surplus for an extended period will be challenging ... and given that double-digit unemployment rates are expected to persist for several decades," the fund's Article IV review said.

But Tsakalotos answered that the argument that "Greece cannot sustain high fiscal surpluses that surpass 1.5 percent of GDP is in contradiction to recent developments."

Eurogroup sides with Athens

Eurogroup President Jeroen Dijsselbloem also waded into the row, accusing the IMF of being surprisingly pessimistic over the health of the Greek economy.

Belgien Griechischer Finanzminister Euclid Tsakalotos (Reuters/F. Lenoir)

Greek Finance Minister Euclid Tsakalotos thinks lenders are overly pessimistic about the country's future

"It's surprising because Greece is already doing better than that report describes," Dijsselbloem, who chairs meetings of eurozone finance ministers, told Dutch television.

He said Greece's creditors, which include both the IMF and eurozone states, would be prepared to ease the terms of debt repayments further if Athens continued to cooperate on reforms. But he ruled out any relief on principal debt.

Months of bickering have delayed progress on Greece's 86 billion euro ($92.4 billion) bailout program agreed in 2015.

Griechenland Athen Alpha Bank (picture-alliance/abaca)

Greek leaders want to avoid a repeat of the national bank closures in 2015

While European officials insist that the IMF participate in the bailout, the fund says it will not lend more unless the country's long-term debt is sustainable, and that requires further substantial debt relief and realistic budget targets.

'No more austerity'

Meanwhile, Greek government spokesman Dimitris Tzannakopoulos said the country was opposed to IMF demands for a contingency austerity program after the current bailout program ends next year.

The Athens government needs to agree with the IMF and its European creditors on more reforms in order to keep tapping the bailout funds and avoid the renewed possibility of default.

But deep divisions remain, with Greece refusing to implement new labor reforms and the IMF at odds with European lenders over the extent to which the country's massive debts should be eased.

Watch video 01:39

EU says Greece on the road to recovery

mm/jm (AFP, AP, Reuters)

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