IMF report calls for more action

The International Monetary Fund?s progress report on the Greek economy, which was to be submitted late on February 28 to the organization?s governing board, reportedly records a significant, 6 percent, drop in the deficit and greater-than-forecast shrinking of gross domestic product (GDP) in 2010.

The report will be discussed at a special session of the board on March 14, where the fourth installment (amounting to almost 5 billion euros) of the loan to Greece is set for approval.

Sources suggest that the report makes clear the IMF?s readiness to proceed to the extension of the loan?s repayment period from four-and-a-half to 10 years, provided that the European Union first discusses and approves a similar extension, which has not happened yet.

Concerns within the IMF regarding Greece?s ability to repay the loan have led both the IMF managing director, Dominique Strauss-Kahn, and the fund?s mission chief to Greece, Poul Thomsen, to state their intention to move Greece from the short-term Stand-By Arrangement to the medium-term Extended-Fund Facility. However, a number of parties within the EU are reluctant to accept such a move, while others are stalling over the timetable for the loan repayment.

A similar difference in opinion between the IMF and the EU is over whether Greece should be allowed to buy back some of its debt. IMF officials brand this as a ?useful tool? in the general effort to contain the debt burden, though Germany and other EU members have rejected it for the time being.

The report re-emphasizes the need for deeper structural changes, improvements in the tax collection mechanism, liberalization of closed professions and opening up the energy sector, as well as stressing the importance of steps being taken in healthcare and in the creation of a single salary system for the public sector.

As far as the bone of contention between Athens and its creditors, the utilization of state assets to the amount of 50 billion euros by 2015, is concerned, the report notes that the government?s privatization program must advance as quickly as planned in order to maximize returns.

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