ECONOMY

IMF’s Thomsen insists Greece must stick to program

Sustained reductions in public spending and continuous public finance reform will enable Greece to survive the crisis, Poul Thomsen, director of the International Monetary Fund?s mission to Greece, told Skai Television on Wednesday. The IMF representative noted that if all goes according to plan, Greeks could detect some light at the end of the tunnel by next year.

The interview followed the release of a report by the Washington-based Fund on Wednesday which praised Greek officials for their ongoing efforts in cutting budget deficits but warned that the government must move quickly to bring public debt under control.

Asked about the unprecedented tax hikes taking place in Greece, measures which are predominantly affecting lower income earners and by some accounts are dragging the economy into greater recession, Thomsen argued that even though taxes are high, the question ought to be rephrased. He noted that the emphasis is not on tax hikes, but on improving the tax system so that citizens pay according to their revenues and for a fairer system of tax distribution.

In response to a question on the issue of reducing public spending and the size of the public sector, Thomsen noted that major steps have been made in the domain of salary and pension cuts. According to the IMF official, the government needs to pay more attention to this area and carry on with its efforts.

The privatization of state-owned assets as seen in the government?s midterm fiscal plan was another topic of discussion. While critics deem the plans unrealistic timewise, given the local bureaucracy, Thomsen spoke about the option of putting to use and properly managing state assets. Had the country acted sooner, he said, revenues would have been much higher and no salary and pension cuts would have been deemed necessary to reduce deficits today. Thomsen also defined the privatization scheme as a ?particularly ambitious? plan, adding that the country?s public assets are vast and, if properly managed, could help Greece survive the crisis.

Responding to those who have criticized the memorandum — including Grece?s opposition parties — Thomsen said that the public finance reform program is on the right track. Defining the program as a ?living organism,? the official noted that it being constantly developed, according to fresh needs and requirements, and that it will eventually lead to Greece getting out of the crisis.

?I understand the social reaction which comes from salary cuts and people getting laid off, but soon, beginning from next year, Greece will be able to see light in the tunnel through improved financial conditions, the economy recovering and lower unemployment.?

Will new measures be added to the existing ones if the targets for public finances are met by the end of this year?

It all depends on the ability of the Greek authorities to fully implement all that they have pledged, along with the structural reforms that the country is in urgent need of, without any delay, said Thomsen.