A spokesman for the International Monetary Fund on Friday expressed the IMF’s opposition to the restoration of Greek pension bonuses and its insistence on the need for pensions to be further reduced along with cuts to the tax-free threshold for income.
In comments to reporters on Friday after a visit to Athens, IMF mission chief for Athens Peter Dolman described the restoration of the so-called 13th pension in May as a “big mistake.”
Instead of pensions, he said, the support should have gone to other areas, such as tackling youth unemployment. Dolman also took issue with the level of Greece’s tax-free threshold, noting that the number of people paying income tax in Greece is the lowest in Europe.
The Fund appeared upbeat on the prospects for Greece’s primary surplus target of 3.5 percent being reduced as early as 2020.
Dolman said Greece looked on track to meet its target this year but said there is a gap for 2020 and that it remains unclear how this will be filled.
He advised against cuts to public investments, saying the tax base should be broadened to create fiscal space for social policies and tax cuts.
As for growth, the Fund forecasts that Greece’s rate for both 2019 and 2020 will be around 2 percent. It “will take another decade and a half for real per capita incomes to reach pre-crisis levels,” the IMF said at the conclusion of its mission.
Overall, it said, the new government “has made a promising start.” A stronger effort is “urgently” needed though “if Greece is to become competitive within the currency union, eliminate the debt overhang, and achieve more inclusive growth.”