ATHENS: The International Monetary Fund on Friday called on the European Union to grant Greece additional debt relief and soften its demands for budgetary efforts.
Even if Athens fully respects a prescribed programme of austerity and reforms, the IMF said in an annual report on the Greek economy, the government will still require a reduction of its debt mountain.
“Even with full implementation of this demanding policy agenda, Greece requires substantial debt relief calibrated on credible fiscal and growth targets,” the IMF said.
“The authorities’ current targets remain unrealistic,” it said, referring to an objective set by the EU that Greece must generate a budgetary surplus of 3.5 percent of gross domestic product (GDP), excluding debt servicing, by 2018.
Double-digit unemployment rates projected to last until the middle of the century mean Greece cannot be expected to achieve high growth rates and a budgetary surplus of this magnitude at the same time, it said.
“In this context, it cannot be assumed that Greece can simply grow out of its debt problem. Further debt relief will be required to restore sustainability, going well beyond what is currently under consideration, and it should be calibrated on realistic assumptions about Greece’s ability to generate sustained surpluses and long-term growth,” the report said.
