No more austerity for Greece: IMF

In light of the recent adoption of short-term measures for Greece’s debt which were welcomed by the IMF its spokesman Gerry Rice reiterated that they do not support more austerity measures for Greece but this would depend on surplus targets.

The IMF was not be asking for additional austerity, Rice added, but if the Europeans and Greece decide on a higher and more ambitious primary surplus target, the IMF’s backing would require that this is supported with additional structural reforms.

According to Rice the IMF prefers to see lower primary surplus targets for Greece, around 1.5% of GDP, as well as debt relief. “There should not be any doubt about the IMF’s position,” he said. Such a target would be realistic and involve less austerity for the Greek people, Rice said.

“A primary budget surplus of 3.5%of GDP will bring additional austerity measures for the Greek people, which is something we don’t want,” he said.

“As the IMF, we must ensure that there are measures for 3.5% [of GDP primary surplus],” he said, noting that the current programme agreed between Greece and the European Stability Mechanism (ESM) envisaged measures that, based on IMF calculations, would result in a primary surplus of 1.5%.

Rice said that talks on the IMF’s participation in the Greek programme were taking place on a daily basis via teleconferences and that the Fund needed reliable forecasts. Regarding the disagreements with the European institutions in the Greek programme, he said these were “natural”. Other financial assistance programmes involving the IMF and other agencies eventually resulted in an agreement, he pointed out.