IMF’s Blanchard says Greek budget proposals not enough

Greece’s budget proposals are not enough to ensure a surplus this year, the International Monetary Fund’s chief economist was quoted as saying on Monday.

Greece was supposed to have a 3 percent budget surplus in 2015, but that looks unrealistic now, Olivier Blanchard told the French financial newspaper Les Echos in an interview.

Lowering that surplus would lead to new financing needs, for which Greece would again need European help. That could work only if, in exchange, Greece presented a coherent programme, he said.

“Considering that the most recent estimates mention a substantial budget deficit, we need credible measures to transform this into a surplus and maintain this surplus in the future,» Blanchard was quoted as saying. «This is far from being the case at the moment.”

Three weeks ago, the European Commission slashed Greek growth and surplus projections and said it expected Greece’s primary surplus – the budget balance before debt servicing costs – would be only 2.1 percent this year, rather than the 4.8 percent projected just three months earlier.

It also expects the 2015 headline budget balance will deteriorate from a 1.1 percent surplus to a 2.1 percent deficit and expects the 1.6 percent surplus forecast for 2016 will turn into a 2.2 percent deficit unless policies change.

“What is obvious is that the (Greek) pension system is often too generous and that there are still too many civil servants,» Blanchard told the newspaper at a central bankers’ meeting in Sintra, Portugal.


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