Wednesday, November 22, 2017

Greece and IMF squabble over austerity and forecasting

By on December 13, 2016

Greece's Prime Minister Alexis Tsipras addresses lawmakers during a parliamentary session in Athens, on Sunday, May 8, 2016. Greek anarchists hurled firebombs, chairs and wooden planks at riot police in brief clashes outside parliament while lawmakers were debating a controversial austerity bill, disrupting a much larger peaceful rally on Sunday. (AP Photo/Yorgos Karahalis)

Greece’s Prime Minister Alexis Tsipras addresses lawmakers during a parliamentary session in Athens, on Sunday, May 8, 2016. (AP Photo/Yorgos Karahalis)

ATHENS, Greece – The Greek government and the International Monetary Fund squabbled Tuesday over further reforms the debt-hobbled country is being asked to make as part of its bailout.

The left-led government said it refuses to legislate any further cutbacks after the bailout ends in mid-2018, and is accusing the IMF of citing “false” data in calling for sweeping pension and tax reforms.

Officials from the IMF are in Athens along with representatives from Greece’s creditors in Europe over what the Greek government has to do next to get more bailout loans, participation in a European Central Bank bond-buying program and longer-term meaningful debt relief.

The talks, which are set to focus on labor reforms and budget savings, were initially scheduled for completion last week but the sniping between the Greek government, increasingly unpopular with austerity-weary Greeks, and the IMF officials could see them run into next year.

Without actually naming the IMF, Prime Minister Alexis Tsipras railed against “foolish technocrats … who can’t even get their numbers right” on Greece’s economy.

His barb came in response to an article by senior IMF officials Monday, who denied that the fund is seeking more austerity measures in Greece, and urged “a radical restructuring of (Greece’s) public sector.”

The article on the IMF blog said cuts under the bailout program have “already gone too far,” to the degree where “the delivery of basic public services such as transportation and health care is being compromised.”

But it also said that Greece has failed to address two major problems – a system that leaves more than one in two Greek households exempt from any income tax, and “extremely generous” state pensions that are commensurate with the “richest” European countries.

“If Greece agrees with its European partners on ambitious fiscal targets, don’t criticize the IMF for being the ones insisting on austerity when we ask to see the measures required to make such targets credible,” said the article, signed by Poul Thomsen and Maurice Obstfeld.

Government spokesman Dimitris Tzannakopoulos urged the IMF to “improve” its economic forecasts as Tsipras’ office published a list of past, failed, IMF predictions on Greek GDP growth.

The IMF participated in Greece’s two previous bailouts, but is now skeptical of joining in again as both Greece and the Europeans want it to do.

In Brussels, European Commission spokeswoman Annika Breidthardt defended bailout policies as “sound,” and said an agreement can be reached in the current negotiations “if all program partners engage constructively.”

“Greece has already implemented major reforms under the (bailout) program and is on track to reach the agreed fiscal targets,” she said. “It is important that all institutions fully recognize these achievements of the Greek program.”

Greece has depended on rescue loans since 2010. In return, successive governments have agreed to harsh income cuts, tax hikes and reforms. But the economy has contracted by a quarter, and unemployment remains at 23 percent.

Greece’s debt also stands near 180 percent of its GDP – a level the Greek government and the IMF consider unsustainable – and a return to independent financing through bond issues seems unlikely any time soon.

image_print

You must be logged in to post a comment Login

Start your Free Trial for a limited time!