IMF: Greek economic targets must be realistic

3 Aug 18

Greece must be realistic about its economic goals despite successful progress since its fiscal crisis, the IMF has warned.

The European country has eliminated its high fiscal and current account deficits and restored growth but should focus on its legacies and boosting inclusive growth, the Washington-based lender said in its Greek Country Focus.

The IMF directors said in the consultation that “long-term stability remains uncertain” and they stressed the need for “realistic assumptions” for Greece’s targets and projections.

But Peter Dohlman, the country’s mission chief for IMF, said: “While much has been achieved, Greece faces very significant crisis legacies.”

These include high levels of public debt, unemployment and high poverty rates, which should be addressed.

He added: “Greece will need to continue to protect social and investment spending working within the high surplus targets agreed between Greece and European institutions.”

The European bloc has provided debt relief to the country, but the IMF said that Greece will need to achieve high GDP growth for many years to keep the public debt down.

In June eurozone finance minister released a €5.7bn bailout loan to ensure that Greece can stand on its own after it exists the bailout.

The country will exit its €86bn bailout programme this month, which is the third since 2010.

The country’s reform programmes, which were called for by lenders during the crisis, are still ongoing.

Dohlman said: “We expect the full benefits of existing reforms to materialise gradually, but sustained reform efforts, including beyond those in the pipeline, will be needed for Greece to attract more investment, create more quality jobs, and afford better social protection.

“Steadfast implementation of reforms will gradually improve the prosperity and welfare of the Greek population, making the Greek economy more resilient to shocks, and closing the gap with euro area partners,” he added.

The country’s growth is expected to reach 2% this year and 2.4% in 2019. Unemployment is also declining, IMF said.

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