The International Monetary Fund (IMF) is unequivocally pointing to the current Greek government as responsible for the high primary budget surplus targets (3.5 percent of GDP) that it ostensibly agreed to with European creditors for 2019 and thereafter.
Top IMF officials Maurice Obstfeld and Poul Thomsen said as much, in a joint article posted on the Fund’s online blog, with the timing and content essentially casting a glaring light on resumed negotiations in Athens this week between the Greek side and institutional creditors.
At stake, at least in the first stage, is the conclusion of the now delayed second review of the Greek program (third bailout), a prerequisite for whatever further debt relief, the IMF’s role in the program and the increasingly imperative matter of fiscal targets after 2018.
Both men emphasized that Greece’s debt is unsustainable at the current levels and will not become sustainable unless it is significant reduced.
Moreover, Thomsen and Obstfeld have reiterated the IMF’s position that Greece must expand its tax base by reducing the maximum tax-free ceiling, proceeding with more pension cuts and liberalizing the regime governing mass layoffs.
In a more ominous tone, the two IMF officials said a compromise between the Fund and European creditors is difficult over the issue of primary budget surplus targets for Greece; and equally difficult between the leftist Greek government and its creditors.
