The Greek government's plan for repairing its debt-ridden economy got the okay from the European Central Bank and the International Monetary Fund this weekend. As a result, Greece will be the recipient of a $146 billion financing package. While this has not exactly been cause for celebration in Greece or throughout the EU, IMF Managing Director Dominique Strauss-Kahn praised Greece's "ambitious policy package" yesterday. In an official IMF statement, he said the government recognized that reform needed to be based on the two strong "pillars" of "fiscal policy and pro-growth measures":
A combination of spending cuts and revenue increases amounting to 11 percent of GDP—on top of the measures already taken earlier this year—are designed to achieve a turnaround in the public debt-to-GDP ratio beginning in 2013 and will reduce the fiscal deficit to below 3 percent of GDP by 2014. Measures for 2010 involve a reduction of public sector wages and pension outlays —which are unavoidable given that those two elements alone constitute some 75 percent of total (non-interest) public spending in Greece.
“Pro-growth measures will be aimed at modernizing the economy and boosting its competitiveness so that it can emerge from the crisis as quickly as possible. Steps include strengthening income and labor markets policies; better managing and investing in state enterprises and improving the business environment. Reforms to fight waste and corruption—eliminating non-transparent procurement practices, for example--are also being undertaken.
You can find several helpful resources for understanding the IMF's work with the Greek government here.
05-03-2010 4:32 AM