NEWS

Athens has homework to do, says troika

Representatives of the European Commission, European Central Bank and International Monetary Fund (known as the troika) yesterday approved the release a 9-billion-euro tranche of loans but warned that the government would need to undertake some serious structural reforms in 2011, leaving it with a long to-do list ahead of the new year. The troika officials praised Greece for reducing its runaway deficit from 15.4 percent of gross domestic product in 2009 to 9.4 percent by the end of this year but warned that there could be no letting up now. «The program is off to an impressive start but it is also at a crossroads,» said IMF mission chief for Greece Poul Thomsen. «The sustainability of achievements to date will only be maintained if there is a very determined effort to move on structural reforms.» Athens is aiming to cut its deficit by a further 5 percent of GDP in 2011 but Thomsen said a range of measures would be needed to achieve this. «The 5 percent cut has to come from fiscal structural reforms… it will not come from tax increases, it has to come from better tax collection and more efficient use of public resources.» Thomsen said that Greece could save 2 percent of its annual GDP by conducting some reforms in the healthcare sector alone. The government has been set a target of reducing healthcare costs by 2.1 billion euros next year by pushing through a computerized prescription system and cutting back on spending at public hospitals and social security funds. However, this is just one on a long list of tasks the government will face. Others include shutting down some public bodies, overhauling the tax collection mechanism, passing a law on the liberalization of closed professions and reducing costs at public enterprises by 800 million euros per month. The government will also table a bill next month that will allow companies to bypass collective contracts if they run into financial difficulties and offer employees alternative pay pacts, as long as they do not earn less than the national minimum wage of 740 euros before tax. The circumstances under which firms will be allowed to legally impose a wage cut on their employees have yet to be determined.