Athens: Greece pushed back against the International Monetary Fund’s view that the government’s economic reforms are heading off track.
In official responses, published with an IMF report on Greece late Tuesday, Finance Minister Euclid Tsakalotos said the fund’s assessment was not based on recent evidence, while Bank of Greece governor Yannis Stournaras said it downplayed progress on the financial sector and was unduly pessimistic.
Talks between Greece and creditors for the completion of the second review of its €86 billion ($92 billion; Dh337 billion) bailout programme have stalled over significant differences between the IMF and Eurozone on projections for Greece’s economy, targets and debt sustainability. A deal between creditors is needed by a meeting of Eurozone finance ministers in Brussels on February 20, before the Dutch elections on March 15. After that, reaching agreement could become even trickier.
“The IMF sees no solution that does not involve debt relief,” Gabriel Stein, an economist at Roubini Global Economics, said in a note to clients. While the issue is complicated by German insistence on IMF participation, “in today’s political climate, Germany cannot afford to cut Greece loose” and “this strengthens the hand of the IMF and of Greece in their respective negotiations,” he said.
Greece won’t meet fiscal surplus targets set by its Eurozone creditors, the IMF said on Monday, after executive directors met to discuss the fund’s annual assessment of the nation’s economy. The country’s debt burden and gross financing needs may become “explosive” after 2030, the fund said.
The yield on two-year notes neared 10 per cent on Tuesday as the quarrel fuelled concern the country is running out of time to complete the review before the busy election season begins. The yield rose 10 basis points to 9.83 per cent at 10.49am in Athens.
The fund’s assessment of the Greek economy presents an overall picture of the reform effort that’s not representative of the actual efforts exerted by the Greek government during its bailout programme, Tsakalotos said in his response. This means the effect of reforms on economic growth aren’t duly accounted for in the IMF’s debt sustainability analysis, he said.
Dutch Finance Minister Jeroen Dijsselbloem, who chairs the Eurogroup of Eurozone finance ministers, echoed the Greek criticism of the IMF in an interview on RTLZ on Tuesday. The IMF published a “a very gloomy report” that had become outdated in the meantime, he said.
