ECONOMY

Greece praised, and warned

Greece yesterday earned praise from the International Monetary Fund (IMF) for taking steps to substantially reduce its public deficit, but was advised to strengthen its public finances and labor market and reform its social security system before problems begin to appear. «By 2012-15 a problem will start to affect public finances very seriously,» Robert Ford, head of the IMF mission to Greece, told a news conference. The Greek government has appointed a committee to study the issue, but plans no major changes in the pension system during its term of office, which ends in 2008. In preliminary conclusions on the Greek economy issued on Friday, the IMF also said there was a need for a steady strengthening of public finances with the objective of achieving a cyclically adjusted budget balance in 2010, followed by a surplus early in the next decade. «The government has done a good job in 2005-6 in pulling the budget deficit down to much more acceptable levels… but the job is not complete,» Ford said, pointing to a desirable fall «in the order of 3 percent of GDP» in coming years. The report added that Greece looks likely to attain its budget deficit target for 2006, but authorities have to control outlays and vigorously enforce tax collection. On growth, Ford said the Greek economy had notched high figures for some time, and «is most likely to continue to be strong next year as well.» Economy Minister Giorgos Alogoskoufis welcomed the findings as «balanced.» «On many issues the report points out problems that the government has alread y noted,» he said. The IMF report commends the Bank of Greece for stepping up monitoring of banks’ lending standards, strengthening provisioning requirements and introducing new liquidity rules. But the Greek government should take steps to improve the public credibility of the national statistics service, Ford argued in statements to reporters, suggesting that the department be made independent of the Finance Ministry. «I’m not talking about the substance… (but) the public credibility of the national statistics office is not as strong as it ought to be,» he said. The IMF’s final conclusions on Greece for 2006 are expected to be released in December. (AFP)