Greece due to receive further foreign aid in July, more measures necessary to beat debt crisis: EU-IMF auditors

12:16, June 04, 2011      

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Greece is due to receive the next tranche of foreign aid this July, but needs to swiftly introduce further austerity and structural reform measures to beat the debt crisis, said on Friday a delegation of European Union and the International Monetary Fund (IMF) auditors in an e-mailed press release.

Wrapping up their latest review of Greek finances in Athens EU- IMF representatives issued a joint statement, noting that Greece has made "significant progress" in the first year of implementation of a three-year adjustment plan to exit the crisis, but more steps should be taken with no delays to fully meet targets.

According to the statement, the auditors reached an agreement with Greek officials on a new package of measures to reach fiscal goals, boost competitiveness and growth, securing further aid to Athens.

Based on their report the fifth 12 billion euro (17.38 billion U.S. dollars) tranche of aid from the 110-billion euro (159.36 billion U.S. dollars) support package agreed last year will be released "most probably in early July," as talks are under way for an agreement on a second three-year aid pact to the debt- ridden country this June.

Debt-ridden Greece narrowly escaped bankruptcy in May 2010 through EU-IMF support package in return of bold austerity and reform measures to reduce a budget deficit reaching up to 15.4 percent of GDP in late 2009 and overcome finance issues by 2014.

But after a promising start, the Greek plan to exit the crisis has gone off track due to recession, a shortfall on revenues and delays in the implementation of structural reforms.

As scenarios of a Greek default this summer or a Greek debt restructure continue, under the parallel pressure of EU-IMF officials, the Greek government promotes further austerity measures and steps up the introduction of a five-year massive privatization plan in order to reach all targets on time.

EU-IMF auditors forecast Friday that the Greek economy "will stabilize at the turn of the year,"pointing to "encouraging signs recently, in particular a notable pick-up in exports, unit labor costs which are set to decline further, supporting the strong export dynamics, and inflation on a declining trend".

In the fiscal area, according to their statement, the Greek government has committed to a medium-term fiscal strategy until 2016 that will enable it to maintain its 2011 and medium-term fiscal targets. The plan includes a significant downsizing of public sector employment, restructuring or closure of public entities, reduction of tax exemptions, increases in property taxation, and stepped up efforts to fight tax evasion.

In regards to an ambitious five-year privatizations and asset management program, Greece will create an "independently managed privatization agency", while in the financial sector, policies are in place to ensure adequate liquidity provision for the banking system, said the statement.

The Greek government intends to push all necessary draft bills before the parliament later this month, amidst rumors of a negative vote which could trigger early general elections this July, as some deputies of the ruling party appear to succumb to pressure of labor unions and citizens who protest austerity policies on a daily basis.

Left wing party protesters blocked the entrance of the Greek Finance Ministry, raising banners for a general strike and marched in the center of Athens on Friday. The two umbrella labor unions of private and public sector employees GSEE and ADEDY will hold one more demonstration on Saturday and schedule a general strike for June 15. Furthermore, Facebook activists continue a peaceful sit-in protest in front of the parliament building for nine days and will join a mobilization across Europe over austerity measures on Sunday.

Source: Xinhua

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