As part of the effort to open up the economy and make it more competitive, the government remains committed to selling €50 billion in public assets. And the support has been designed to encourage continued liquidity support from the euro system.

All rights reserved. But even with the substantial private debt write-off that was just agreed, Greece’s debt will remain very high for some time. Greece will need approval from the European bailout lenders in order to repay its IMF loans early, but top officials in the agency and the European Commission are said to have signalled backing for the idea. 2020 Projected Consumer Prices (% Change). © 2020 International Monetary Fund. At the same time Greece borrowed 130 billion euros more from European state institutions in a second bailout. Currency devaluation is not an option for Greece because if its membership in the eurozone.

Under the new IMF-supported program, €50 billion has been set aside to help banks cope with these various challenges. On the surface, this seems harsh. Appropriate incentives have been structured to encourage private participation in recapitalization, while the framework for recapitalization and resolution has been overhauled to ensure funds are put to good use, and that political interference in bank management is minimized. Yet tax revenue, at 39 percent of GDP, remains significantly below the euro area average. “The new Fund-supported program will enable Greece to address these challenges while remaining in the Eurozone. The focus of the program is therefore to restrain spending while strengthening the core social safety net. Wages have increased faster than productivity growth for years. In fact, looking more closely at the recent historical record, tax revenue in Greece remains fairly close to its long-term average. The recession is also taking its toll, with the number of non-performing loans rising to more than 15 percent of all loans by end-September 2011. But the timetable has now been scaled back compared to the strategy under the previous IMF-supported program to better reflect market conditions and the time needed to prepare assets for sale. Indeed, since 2000, social security spending in Greece has increased by about 6 percent of GDP. Full and timely implementation of the planned adjustment—alongside broad-based public support and support from Greece’s European partners—will be critical to success, Lagarde said. "The IMF loans are expensive, with an interest rate of 5.1% - so that means we can lower debt servicing costs and we will have an increase in the fiscal space to help vulnerable groups in society," he said on Greek radio. The country emerged from its third international bailout program last August and has seen significant improvements in an economy battered by years of recession and budget cuts. The economic program also targets new reductions in public spending.

The overall unemployment rate stood at more than 20 percent as of November 2011. But this is a complex reform effort that will take time and strong political commitment, and some of the dividends do need to be devoted to reducing the high tax burden on the formal sector in Greece. The main goal of Greece’s new IMF-supported program is to support a return to growth through a major improvement in competitiveness (photo: Jeremy Lightfoot/Robert Harding/Newscom).

A key ingredient in the government’s revamped economic strategy was the successful conclusion on March 9 of a substantial write-down of Greece’s bonded debt, which will dramatically reduce the country’s medium-term financing needs. • Large competitiveness gap. This means that unit labor costs can only be improved through improved productivity—which is difficult to engineer in the short run—or through wage adjustments. But tax revenue, at 39 percent of GDP, remains significantly below the euro area average, reflecting endemic tax evasion and narrow tax bases. Improvements in Greece's bond yields have been accompanied by a boost to the stock market, which on Monday closed up 26.1% on the year. Putting growth at the center of the agenda. The last Article IV Executive Board Consultation was on November 13, 2019. He spoke after a meeting in Washington between Greek finance minister Euclid Tsakalotos and IMF managing director Christine Lagarde.

Overall, better tax collections can only deliver a small portion of the 7 percent of GDP needed to attain the fiscal target of 4½ percent of GDP for 2014 that has been agreed under the program. The program focuses on labor market reforms to realize adjustment, aiming to also limit the rise in unemployment. © 2020 International Monetary Fund. [49] But wage cuts will not by themselves solve the deep-rooted problems of the Greek economy. The IMF attached nearly 20 conditions, on average, to each loan it has approved in the past two years, said Eurodad, which comprises 48 non-governmental organizations from … The IMF contribution of €28 billion will be disbursed in equal tranches over a four-year period. Greece’s European partners have committed to provide adequate support, during and beyond the program period, for as long as it takes for the country to regain market access, provided the policies that have been agreed are implemented in full. Ensuring the solvency of the banking sector while protecting depositors. • A large public sector with generous pay compared to the private sector. This should help boost investment. The yield on Greece's 10-year bond dropped further to 3.28% Monday, to levels not seen in 14 years. Unit labor costs (a key measure of competitiveness) in Greece increased by over 35 percent during 2000-10, compared to just under 20 percent in the eurozone.

A lower minimum wage will help reduce the competitiveness gap, and also help young people in particular gain a foothold in the labor market. [108] [109] The topic of sovereign debt restructuring was taken up by IMF staff in April 2013 for the first time since 2005, in a report entitled "Sovereign Debt Restructuring: Recent Developments and Implications for the Fund's Legal and Policy Framework". Greece wants to repay about €3.7bn (£3.2bn) in IMF loans, Reuters said. Achieving a viable level of public spending. The request to pay off the loan early comes a month after the IMF reported that Greece had now entered a period of economic growth "that puts it among the top performers in the eurozone". These would come on top of deep cuts made during the previous three years.

The new loan will be made under the Extended Fund Facility, which is designed for countries seeking to …

The current minimum wage in Greece is 50 percent higher than in Portugal, 17 percent higher than in Spain, and 5-7 times higher than in Romania and Bulgaria. Board Discussions on Greece Email notification sign-up Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website.

The previous 3-year Stand-By Arrangement that was approved in May 2010 has been cancelled by the Greek authorities, which means that any undisbursed funds have also been cancelled and will not automatically become part of the new program. IMF Loan is the fourth upgrade of Path 2 for the Banana Farm in BTD6. The main goal of Greece’s economic program is to support a return to growth through a major improvement in competitiveness. Youth unemployment in Greece is painfully high at close to 40 percent. Approval of the new program will lead to the immediate disbursement of about €1.65 billion ($2.2 billion). The lack of competition also impairs other parts of the economy that rely on these services for their products, holding back innovation and job creation.

The IMF Press Center is a password-protected site for working journalists. The IMF said in its report: "The economic recovery in Greece is accelerating and broadening. Public spending in Greece as a percent of GDP is still close to the euro area average of 49-50 percent.

Greece continues to face steep challenges when it comes to its ability to compete in international markets.


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