The Greek debt is unsustainable in the long-term and further fiscal measures are needed, despite progress and sacrifices made, the International Monetary Fund said on Monday.
According to the statement issued after the IMF board meeting, Greece needs to make reforms and take immediate measures for the economy to recover and meet the bailout program targets.
Pension cuts, lowering the threshold of tax-free incomes, lower taxes, tackling tax evasion, adjustment of debts to the state, management of non performing loans, opening of closed professions, higher percentages of mass lay-offs, increasing privatizations are some of the measures proposed by the Fund directors.
The IMF predicts Greece’s economy will reach growth of just under 1 percent per year, far from the 3.5% primary surplus European institutions expect.
The country’s debt is unsustainable at around 180% of GDP, the broadest measure of economic output, the IMF directors said, proposing more debt relief measures. This would put Greece in a more realistic path towards economic recovery.
Board members stressed the importance of developing realistic forecasts and objectives, the importance of ensuring adequate funding and debt relief, and taking up fiscal adjustments with high quality measures, and by adopting a sequence of structural reforms based on strong ownership of the bailout program.
The IMF board directors commended Greek authorities for the significant economic adjustments and correction of imbalances from 2010 onward, through significant reforms. They also recognized that this adaptation had a heavy toll on society, combined with high rates of poverty and unemployment, that contributed to the slowdown in the implementation of reforms.