The International Monetary Fund issued a warning on Friday about the increased risks posed to the Greek economy by this year’s national elections, the court decision on pensions and the state of the credit system.
Issued on the day that the creditors completed their inspection in Athens, the IMF report also expressed clear concerns over the government’s plans on matters such as minimum salary, and insisted on the reduction of the tax-free ceiling from January 2020.
Most issues remain open after this week’s negotiations between the government and its creditors, with obvious disagreements over subjects such as the new framework to succeed the Katseli law. The disagreements are mainly focused around the cap on the value of debtors’ protected properties, as well as the minimum wage hike and the abolition of the subminimum salary for under-25s.
The eurozone representatives only issued a short statement that points to the continuation of negotiations until the compliance report is issued on February 27. The close dialogue on the challenges and priorities of the economic policy will go on, the statement said, allowing a government official to argue that “we are very much on the right track.”
However, the IMF, which only has an advisory role in the post-bailout supervision of Greece, issued a more detailed three-page statement of conclusions in the context of its own first post-program assessment (it was the second for the European institutions) in which it puts its points across more clearly, although not as strongly as during the bailout period.
The Fund argues that the risks have recently grown more serious, as on top of the negative legacy of the crisis (high public debt, the deterioration of corporate finances and the problems in payments) have come the external risks and the election cycle that could reverse reforms and harm investments. Another risk cited is the court decisions that could have a major fiscal impact, while banks also remain sensitive regarding funding conditions and regulatory changes.
A senior government official said after the end of the week’s negotiations that the creditors “are expecting some more specific proposals on two or three issues,” the most important being the Katseli law.