2006 IMF report is due today

A report by the International Monetary Fund (IMF), to be handed to Economy Minister Giorgos Alogoskoufis today, expresses concern over the medium-term prospects of the Greek economy. The main questions center on the sources of growth. These are posed by the fact that in recent years such sources were provided by outside transient factors, such as European Union investment subsidies, while foreign direct investment has been lacking. The report notes the country’s low productivity, which makes Greece a laggard in the European Union. A factor in the sliding competitiveness is the high domestic inflation, according to the writers of the report. It remains double the EU average and this is a foreteller (unless reversed) of a shrinking of the country’s productive base and employment. In order that Greece become more competitive, the IMF is proposing a broadening of privatizations, deregulation of markets and services and tackling red tape. An IMF delegation saw Alogoskoufis on Friday and gave him advance indications of the content of the report. In turn, they received a briefing on the prospects of the economy, which is expected to grow at an annual rate of 3.6-3.7 percent of GDP this year and 2006. Such a rate is considered satisfactory for the post-Olympic year, the predictions for which were initially rather gray. This time last year, the IMF experts predicted a growth rate of under 3 percent. Alogoskoufis also said that the government is not planning any more labor law reforms but will promote a public dialogue on social insurance with a view to raising public awareness.

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