ECONOMY

IMF advises urgent social security reform, better business environment

The International Monetary Fund (IMF) has recommended the immediate commencement of public dialogue with a view to reforming the Greek social security system, as well as institutional changes in the labor market. In a report released to reporters yesterday, the IMF argues that each day that the reform is delayed means greater cost, fed by the aging of the population which further burdens the fiscal situation. Moreover, it commends the Greek government for initiating a revision of public finances after the elections in March last year, noting that the lack of reliable data hampers the effective monitoring of economic policy. It also expresses support for Athens’s decision to compile accounts on a disbursement basis. The IMF considers that the fiscal adjustment for 2005, as laid out in the budget, is on the whole satisfactory, but states some reservations regarding the government’s projection of a 3.9 percent percent growth rate for the economy. Greece is urged to complete taxation reform, already begun with cuts in corporate rates. The government’s policy, aimed at improving the business environment through a simplification of the tax system, privatizations and the bolstering of competition in product markets, is considered especially positive. The same goes for the policy of promoting private-public partnerships in upgrading infrastructure. Finally, the IMF encourages the government to apply its policy toward modernization of the systems of healthcare and public procurements.