Greece: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Greece

IMF: Country Report, No.41, 2017 (07.02.17): Greece : Selected Issues (related hyperlink above)

Looks at the following issues:
+ Insolvency and enforecement issues in Greece
+ Addressing the burden of tax and social security debt
+ Reforming the Greek pension systemIn its annual review of Greece’s economic policies issued in February 2017 the IMF said that despite the policy constraints imposed by its membership in the currency union, Greece had made significant progress in unwinding its macroeconomic imbalances. But extensive fiscal consolidation and internal devaluation had come with substantial costs for society, which contributed to delays in reform implementation and to policy reversals since the last Article IV Consultation, culminating in a renewed crisis of confidence in 2015. Since then, the situation had stabilised, and growth was estimated to have resumed modestly in 2016.

Notwithstanding the substantial progress achieved by Greece, it still faced fundamental challenges:

(i) a vulnerable structure of the public finances;
(ii) significant tax evasion and an ineffective tax administration;
(iii) impaired bank and private sector balance sheets;
(iv) pervasive structural obstacles to investment and growth.

Moreover, its public debt remained highly unsustainable, despite generous official relief already provided by its European partners. Addressing these remaining challenges and restoring debt sustainability were essential to creating a vibrant and dynamic private sector capable of generating sustainable and equitable growth and employment.

Greece's Finance Minister Euclid Tsakalotos said that the IMF report 'fails to do justice' to the country's potential. The government remained deadlocked with its international lenders over debt bailout and possible debt relief measures leading to renewed concern about the Greece debt crisis.

The issues were due to be discussed again at the Eurogroup meeting on the 20 February 2017. The Eurogroup was due to take stock of the ongoing implementation of Greece's macroeconomic adjustment programme, focusing on plans to carry forward the second review of the programme. Reviews were carried out by the staff of the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund.

Prior to that Greek Finance Minister Euclid Tsakalotos met representative sof the international institutions (European Commission, ECB, ESM and IMF) and Eurogroup President Jeroen Dijsselbloem on the 10 February 2017 to have a discussion on the state of play of the second review.

News sources suggested that the international lenders would be asking Greece for additional initiatives to reduce expenditure by 1% of its GDP (€1.6 billion) in both 2017 and 2018.

• Primary Source

IMF: News Article, 07.02.17: Greece: Priorities for a Return to Sustainable Growth https://www.imf.org/en/News/Articles/2017/02/07/NA020717Greece-Priorities-For-A-Return-To-Sustainable-Growth

IMF: Country Report, No.41, 2017 (07.02.17): Greece : Selected Issues https://www.imf.org/en/Publications/CR/Issues/2017/02/07/Greece-Selected-Issues-44631

The Guardian, 07.02.17: Greece's debt costs rise sharply as worries grow over IMF role https://www.theguardian.com/world/2017/feb/07/greece-debt-imf-split-bailout

ESO: Background information: The Greek debt crisis: Key sources http://www.europeansources.info/record/the-greek-debt-crisis-key-sources/

ESO: Background information: Tsipras wants to give pensioners Christmas bonus http://www.europeansources.info/record/tsipras-wants-to-give-pensioners-christmas-bonus/

Deutsche Welle, 08.02.17: Greece finance minister rejects IMF findings on economy http://dw.com/p/2X8j2

Kathimerini, 07.02.17: Compromise initiative by Juncker, Dijsselbloem http://www.ekathimerini.com/215994/article/ekathimerini/business/compromise-initiative-by-juncker-dijsselbloem

ESO: Background information: Eurogroup statement on Greece http://www.europeansources.info/record/eurogroup-statement-on-greece-3/

Kathimerini, 08.02.17: Bank of Greece disputes IMF view on capital buffer http://www.ekathimerini.com/216011/article/ekathimerini/business/bank-of-greece-disputes-imf-view-on-capital-buffer

EurActiv, 09.02.17: ‘Grexit’ reemerges as IMF and eurozone continue Greek debt squabble http://www.euractiv.com/section/euro-finance/news/grexit-reemerges-as-imf-and-eurozone-continue-greek-debt-squabble/

Euro|Topics: Debates, February 2017: Row over Greek bailout continues / Is the Greek crisis coming to a head again? http://www.eurotopics.net/en/174155/is-the-greek-crisis-coming-to-a-head-again

Carnegie Europe: Strategic Europe, 09.02.17: The Threat of Grexit Returns http://carnegieeurope.eu/strategiceurope/67949

Al Jazeera, 11.02.17: UpFront: Yanis Varoufakis: Grexit 'never went away' http://www.aljazeera.com/programmes/upfront/2017/02/yanis-varoufakis-grexit-170210091246315.html

Politico, 10.02.17: 3 ‘Grexit’ battlelines emerge http://www.politico.eu/article/3-grexit-battlelines-emerge-greece-economy-bailout-imf-europe/

Politico, 10.02.17: No breakthrough on Greek bailout talks http://www.politico.eu/article/no-breakthrough-on-greek-bailout-talks/

Eurogroup: Press Release, 10.02.17: Statement by the President of the Eurogroup Jeroen Dijsselbloem on Greece http://www.consilium.europa.eu/en/press/press-releases/2017/02/10-eurogroup-president-statement-greece/

EurActiv, 10.02.17: Lenders agree on more austerity for Greece to avoid default http://www.euractiv.com/section/euro-finance/news/lenders-agree-on-more-austerity-for-greece-to-avoid-default/

Kathimerini, 11.02.17: Greece says bailout deal close, but will not accept ‘illogical’ demands http://www.ekathimerini.com/216117/article/ekathimerini/news/greece-says-bailout-deal-close-but-will-not-accept-illogical-demands

Kathimerini, 13.02.17: IMF can't cut special deal for Greece but debt solution possible, says Lagarde http://www.ekathimerini.com/216152/article/ekathimerini/business/imf-cant-cut-special-deal-for-greece-but-debt-solution-possible-says-lagarde

European Parliament, 14.02.17: Greece: MEPs say it's time to act on debt crisis http://www.europarl.europa.eu/news/en/news-room/20170213STO62292/

Politico, 14.02.17: Schäuble strikes again http://www.politico.eu/article/german-finance-minister-wolfgang-schaeuble-strikes-again-greece-imf-bailout/

EurActiv, 20.02.17: Schauble denies ‘Grexit’ threat, says Greece on right path http://www.euractiv.com/section/all/news/schauble-denies-grexit-threat-says-greece-on-right-path/

Social Europe, 20.02.17: Is Wolfgang Schäuble As Dangerous To The EU As Donald Trump? https://www.socialeurope.eu/2017/02/wolfgang-schauble-dangerous-eu-donald-trump/

Kathimerini, 20.02.17: Eurogroup expected to determine return of bailout monitors to Athens http://www.ekathimerini.com/216337/article/ekathimerini/business/eurogroup-expected-to-determine-return-of-bailout-monitors-to-athens

Kathimerini, 20.02.17: [Editorial]: Cost of impasse over numbers is adding up http://www.ekathimerini.com/216331/article/ekathimerini/business/cost-of-impasse-over-numbers-is-adding-up

The New York Times, 21.04.17: I.M.F. Torn Over Whether to Bail Out Greece Once Again https://www.nytimes.com/2017/04/21/business/dealbook/international-monetary-fund-greece-bailout.html

---