AFP, Washington :
In order to sustain hard-won gains, Greece should continue its economic reform program and work quickly to shore up its banks, the International Monetary Fund said Friday.
In the wake of the severe downturn, the Greek economy is poised to see solid growth and job creation this year but the “crisis legacies remain significant,” the IMF said.
In its first report since the nation exited the IMF loan program, the fund urged Athens to work quickly to strengthen banks that have a heavy load of bad loans still on their books.
“To maintain hard-earned competitiveness gains amid rising wage pressures, Greece should press ahead with its unfinished reform agenda,” the IMF said.
“The authorities’ growth strategy provides laudable high-level objectives but further measures will be needed to achieve them.”
The challenge facing the country, weary of reforms and belt tightening, will be to balance the need to improve the government’s fiscal position while protecting social spending and reducing the tax burden.
The IMF estimates GDP growth of 2.4 percent this year – just below the government’s own 2.5 percent forecast – but warned that investment growth “remains tepid.”
Restoring lending, which will be key to boosting economic growth, “will require swift, comprehensive and well-coordinated actions” to strengthen banks and promote faster reduction of non-performing loans, which are the highest in Europe at nearly 90 billion euros ($105 billion). But the IMF said Athens would have to weigh its plans carefully to gauge the benefit to banks and the economy and the impact on government debt.
High public debt and a “weak payment culture” complicate the government’s efforts to boost the economy, and the report called for more actions to increase competitiveness without raising taxes, including labor reforms and changes to personal bankruptcy procedures.
However, the government also must prepare a “contingency plan” to deal with potential shocks from pending legal cases seeking pensions and back wages, the IMF said.
In order to sustain hard-won gains, Greece should continue its economic reform program and work quickly to shore up its banks, the International Monetary Fund said Friday.
In the wake of the severe downturn, the Greek economy is poised to see solid growth and job creation this year but the “crisis legacies remain significant,” the IMF said.
In its first report since the nation exited the IMF loan program, the fund urged Athens to work quickly to strengthen banks that have a heavy load of bad loans still on their books.
“To maintain hard-earned competitiveness gains amid rising wage pressures, Greece should press ahead with its unfinished reform agenda,” the IMF said.
“The authorities’ growth strategy provides laudable high-level objectives but further measures will be needed to achieve them.”
The challenge facing the country, weary of reforms and belt tightening, will be to balance the need to improve the government’s fiscal position while protecting social spending and reducing the tax burden.
The IMF estimates GDP growth of 2.4 percent this year – just below the government’s own 2.5 percent forecast – but warned that investment growth “remains tepid.”
Restoring lending, which will be key to boosting economic growth, “will require swift, comprehensive and well-coordinated actions” to strengthen banks and promote faster reduction of non-performing loans, which are the highest in Europe at nearly 90 billion euros ($105 billion). But the IMF said Athens would have to weigh its plans carefully to gauge the benefit to banks and the economy and the impact on government debt.
High public debt and a “weak payment culture” complicate the government’s efforts to boost the economy, and the report called for more actions to increase competitiveness without raising taxes, including labor reforms and changes to personal bankruptcy procedures.
However, the government also must prepare a “contingency plan” to deal with potential shocks from pending legal cases seeking pensions and back wages, the IMF said.
