BUSINESS

IMF opposes high primary surplus target

TAGS: Finance

The International Monetary Fund insists on its position that the target for Greece’s primary budget surplus should be reduced further after 2022.

IMF spokesman Gerry Rice told reporters that the Fund considers the target of 3.5 percent of the gross domestic product up to 2022 as realistic, but after that it believes that the target ought to be reduced to 1.5 percent of GDP, against the 2 percent target for the period from 2023 to 2060 agreed last week at the Eurogroup meeting held in Luxembourg.

He was commenting on a report by the Peterson Institute that dubbed the long-term 2 percent target as “unrealistic” on Wednesday.

The IMF official noted that the debt sustainability analysis the Fund will issue will be based on the targets and parameters that it considers realistic. The fiscal target it will adopt will determine – he said – the extent of the easing of Greece’s debt the Fund considers as necessary for it to become sustainable.

Rice remarked that “progress has been achieved” on that front with the eurozone, although for now the discussions do not seem anywhere near an agreement. He went on to defend the fiscal approach of the IMF saying it is “realistic” and contributes in the recovery of the Greek economy.

He reiterated that the Fund will not contribute in the Greek program financially until there is a clear and credible pledge by the eurozone on the size of the debt lightening.

On the provisional agreement announced in Luxembourg, Rice said its approval by the Fund’s Executive Board will have to be completed by July 27, noting that this way the financial risk for Greece is eliminated as the country will be able to meet its obligations within next month.

The Managing Director of the IMF, Christine Lagarde, is expected to meet with German Finance Minister Wolfgang Schaeuble on July 6 on the fringes of a conference.

Rice confirmed that Lagarde has accepted an invitation by Greek President Prokopis Pavlopoulos to make an official visit to Greece. He added that the date of the visit has not yet been confirmed.

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