Greece warned over economic reforms by IMF

May 18, 2011 - PRLog -- The man leading the IMF mission to Greece has warned that the country's plans for reducing its budget deficit will fall short without further reform.

Greece must cut its budget deficit to 7.6% of GDP this year to meet the terms of its EU and IMF bail-out.

Poul Thomsen told a conference in Athens that it would struggle to get the deficit below 10% at the moment.

Also on Wednesday, Greece appointed banks to help with its privatisation programme.

The government is considering selling some of the state gaming monopoly OPAP and the racetrack operator ODIE and establishing a new company to run state lotteries.

Greece has a target to raise 50bn euros ($71bn; £44bn) through the sale of state assets.

"We will frontload this process by announcing the reduction or elimination of the stake which the state owns in listed companies in telecoms, ports, water management, as well as electricity and gaming," said Greek Prime Minister George Papandreou

The EU and IMF are waiting for Greece to give further details of its plans before paying the next tranche of cash.

Mr Thomsen said: "The programme will not remain on track without a determined reinvigoration of structural reforms in the coming months.

"Unless we see this invigoration, I think the programme will run off track."

'Recipe for catastrophe'
There has been much response to Tuesday's comments from the head of the eurozone finance ministers Jean-Claude Juncker, when he said that a "soft restructuring" of Greece's debts was a possibility.

The European Central Bank's chief economist Juergen Stark said restructuring the debt would be a "recipe for catastrophe".

He blamed "vested interests" in the UK and the US for fuelling pressure on Greek financial markets.

Lorenzo Bini Smaghi, a member of the board of the ECB, also rejected the soft restructuring idea, saying it would bring the Greek economy "to its knees" and be bad for the whole eurozone.

Greece is receiving a package of bail-out loans worth about 110bn euros ($156bn; £96bn) as it struggles to cope with its debts.

Source: BBC News Online
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