The IMF, ECB and EC tripartite committee has published its progress report of the Greek economy during the latest review, which resulted in Greece securing the 6.3 billion euro loan installment.
Aside from praise for the fiscal consolidation taking place in Greece, the report contains a number of issues that must be addressed in order to avoid future conflict. The unresolved matters include:
- The “resource deficit” in the insurance system from the 3.9% reduction of insurance contributions and abolition of third-party taxes.
- Even greater employment flexibility, which the troika deems necessary in order to reduce the rampant unemployment rates
- Reforming the tax-collection structures, particularly for VAT, where the state has huge losses
- Resolving Greece’s public debt sustainability.
Later on Friday, the European Commission will present its report on the Greek economy, which is essentially the updated bailout deal.
On Thursday, the IMF’s Gerry Rice made glowing comments about the achievement of a primary surplus in Greece and revealed that talks for any debt relief will begin the second half of 2014. The IMF’s board will convene in May to review the progress in Greece and the payment of the next 3.4-billion-euro loan installment o Greece.
Nevertheless, Mr. Rice warned that despite the admirable progress, Greece still faces a host of challenges. Contrary to the European Commission’s claim that the Greek debt is sustainable, the IMF representative commented that the Greek debt is still rather high and that not much has changed regarding sustainability.
Additionally, Mr. Rice noted that the Greek bailout program is fully funded for the next 12-months, but additional funding may be needed by the start of 2016; this will be determined at the next, sixth troika review, which is scheduled for the summer.
The European Commission’s fourth review is available here.
The revised program is available here.
