IMF warns tax failure will lead to wage cuts

The executive board of the European Stability Mechanism is due to to hold a teleconference on Monday to confirm the disbursement of Greece’s January bailout tranche, worth 9.2 billion euros.

Athens is expected to receive the money, 7.2 billion euros of which will go toward bank recapitalization, by the end of next week. Greece will then have to complete more “prior actions” to receive two more installments of 2.8 billion euros each in February and March.

Speaking to Saturday’s edition of Ta Nea newspaper, Poul Thomsen (photo), the head of the International Monetary Fund’s program in Greece, said that failure to improve tax collection this year would result in further cuts to pensions and wages.

“To avoid more reductions to salaries and pensions, it is of vital importance that the government progresses with the organization of the tax administration,” said Thomsen. “The government has recognized that the lack of progress is a serious problem and the program now includes steps to tackle this.”

Thomsen’s comments came as Fotis Kouvelis, the leader of the junior coalition partner Democratic Left, ruled out the possibility of further wage and pension cuts in an interview with Parapolitika newspaper.

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