The International Monetary Fund is insisting on more public sector layoffs in Greece, even if they are “targeted,” as well as further reductions in social benefits such as those for the unemployed, families with children etc. In its country report published on Friday the Fund also calls for the effective combating of tax evasion, saying that otherwise more cuts to salaries and pensions will be required.
The report, based on the IMF’s assessments of government efforts to streamline the Greek economy, asks that the solidarity levy be extended beyond 2015, in addition to the acceleration of privatizations. The IMF proposes that Greece even goes as far as replacing the board of the Hellenic Republic Asset Management Fund (TAIPED) with foreign managers if the targets for the first half of the year are not met.
The Fund appears pessimistic on the unemployment front, forecasting that joblessness will reach an average of 24.4 percent this year and 25.1 percent in 2014. It also sticks to its position for a further slashing of the Geek debt held by Greece’s European Union partners.
The report comments on the domestic political scene, praising the implementation of most prior actions over the last few months and the dedication the government has demonstrated in applying the fiscal adjustment program after its derailment during the back-to-back elections last spring.
However the IMF also identifies delays in privatizations, as well as the liberalization of professions and the improvement of the tax collection mechanism. A political crisis must not be allowed to add to the country’s risk, the report notes, referring to the rising popularity of the parties that are against the government’s agreements with its creditors.
There is some self-criticism as well in the report, though: It notes that there is also the risk that the IMF calculations regarding the impact of the recession could be wrong, given the magnitude of the cuts, and that this could throw the whole streamlining program into disarray as the targets are based on a certain attainment of gross domestic product.