{
  "title": "Greece: A Credible Deal Will Require Difficult Decisions By All Sides",
  "publication": "IMF Blog, June 14, 2015",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2015/06/14/greece-a-credible-deal-will-require-difficult-decisions-by-all-sides",
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  "summary": "Negotiations are between Greece and its official creditors: the European Commission, the ECB and the IMF.",
  "sections": [
    {
      "heading": "Negotiation context and core question",
      "content": "- Negotiations are between Greece and its official creditors: the European Commission, the ECB and the IMF.\n- Core question: How much of an adjustment must be made by Greece, and how much by its official creditors?\n- 2012 program arrangement: Greece was to generate enough of a primary surplus to limit its indebtedness, implement reforms to raise growth, and in consideration European creditors were to provide needed financing and provide debt relief if debt exceeded 120% by the end of the decade."
    },
    {
      "heading": "Original and revised primary surplus targets",
      "content": "- Original program targets: primary surplus of 3% in 2015, and 4.5% next year.\n- These targets have become unattainable and \"the target clearly must be decreased.\"\n- Offer made to the Greek government proposed:\n  - Lowering the medium term primary budget surplus target from 4.5% of GDP to 3.5%.\n  - Giving Greece two more years to achieve that target—so the target for this year was reduced to 1%.\n  - Asking for a more limited set of reforms."
    },
    {
      "heading": "Tradeoffs between fiscal adjustment, financing, and debt relief",
      "content": "- A lower primary surplus target implies:\n  - Less painful fiscal and economic adjustment for Greece.\n  - A need for more external official financing.\n  - A commitment to more debt relief from European creditor countries.\n- Limits exist both on what Greece can do and what official creditors can provide given taxpayers to consider."
    },
    {
      "heading": "Reform requirements and fiscal composition",
      "content": "- The IMF view: the lower new target cannot be credibly achieved without:\n  - A comprehensive reform of the value-added tax (VAT) involving a widening of its base.\n  - A further adjustment of pensions.\n- Fiscal structure and required adjustment:\n  - Pensions and wages account for about 75% of primary spending; the other 25% have already been cut to the bone.\n  - Pension expenditures account for over 16% of GDP.\n  - Transfers from the budget to the pension system are close to 10% of GDP.\n  - A reduction of pension expenditures of 1% of GDP (out of 16%) is needed, and can be done while protecting the poorest pensioners.\n- Alternatives for designing VAT and pension reforms are acceptable only if they \"add up and deliver the required fiscal adjustment.\""
    },
    {
      "heading": "Debt relief modalities and conditionality",
      "content": "- Under the existing proposal, debt relief can be achieved through a long rescheduling of debt payments at low interest rates.\n- Any further decrease in the primary surplus target, now or later, would probably require haircuts.\n- For a deal to be effective and credible:\n  - Greek government must offer truly credible measures to reach the lower target budget surplus and show commitment to the more limited set of reforms.\n  - European creditors must agree to significant additional financing and to debt relief sufficient to maintain debt sustainability."
    },
    {
      "heading": "Bottom line",
      "content": "- Both sides face tough choices and commitments: Greece needs credible fiscal measures and reforms; creditors need to provide financing and debt relief within their political constraints.\n- The IMF view expressed: \"We hope that agreement can be achieved along these lines.\"\n\nGreece: A Credible Deal Will Require Difficult Decisions By All Sides — Olivier Blanchard, June 14, 2015.\n\n---\n\n Content in this bundle\n\n- 希腊：为达成可信的解决方案，所有各方都必须做出困难的决定; iMFdirect博客; 2015年6月14日\n  - 希腊：为达成可信的解决方案，所有各方都必须做出困难的决定; iMFdirect博客; 2015年6月14日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 希腊：为达成可信的解决方案，所有各方都必须做出困难的决定; iMFdirect博客; 2015年6月14日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Ελλάδα: Μια Αξιόπιστη Συμφωνία Θα Απαιτήσει Δύσκολες Αποφάσεις από όλα τα Μέρη\n  - Ελλάδα: Μια Αξιόπιστη Συμφωνία Θα Απαιτήσει Δύσκολες Αποφάσεις από όλα τα Μέρη (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Ελλάδα: Μια Αξιόπιστη Συμφωνία Θα Απαιτήσει Δύσκολες Αποφάσεις από όλα τα Μέρη (PDF){rel=\"external\" type=\"application/pdf\"}\n- Grecia: Un acuerdo creíble exigirá decisiones difíciles de ambas partes; Por Olivier Blanchard\n  - Grecia: Un acuerdo creíble exigirá decisiones difíciles de ambas partes; Por Olivier Blanchard (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Grecia: Un acuerdo creíble exigirá decisiones difíciles de ambas partes; Por Olivier Blanchard (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n\nSource: https://www.imf.org/en/blogs/articles/2015/06/14/greece-a-credible-deal-will-require-difficult-decisions-by-all-sides"
    }
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    "Authors: Olivier Blanchard",
    "Published: June 14, 2015",
    "Negotiations are between Greece and its official creditors: the European Commission, the ECB and the IMF.",
    "Core question: How much of an adjustment must be made by Greece, and how much by its official creditors?",
    "2012 program arrangement: Greece was to generate enough of a primary surplus to limit its indebtedness, implement reforms to raise growth, and in consideration European creditors were to provide needed financing and provide debt relief if debt exceeded 120% by the end of the decade.",
    "Original program targets: primary surplus of 3% in 2015, and 4.5% next year.",
    "These targets have become unattainable and \"the target clearly must be decreased.\"",
    "Offer made to the Greek government proposed:",
    "A lower primary surplus target implies:",
    "Limits exist both on what Greece can do and what official creditors can provide given taxpayers to consider.",
    "The IMF view: the lower new target cannot be credibly achieved without:",
    "Fiscal structure and required adjustment:",
    "Alternatives for designing VAT and pension reforms are acceptable only if they \"add up and deliver the required fiscal adjustment.\"",
    "Under the existing proposal, debt relief can be achieved through a long rescheduling of debt payments at low interest rates.",
    "Any further decrease in the primary surplus target, now or later, would probably require haircuts.",
    "For a deal to be effective and credible:",
    "Both sides face tough choices and commitments: Greece needs credible fiscal measures and reforms; creditors need to provide financing and debt relief within their political constraints.",
    "The IMF view expressed: \"We hope that agreement can be achieved along these lines.\"",
    "**希腊：为达成可信的解决方案，所有各方都必须做出困难的决定; iMFdirect博客; 2015年6月14日**",
    "**Ελλάδα: Μια Αξιόπιστη Συμφωνία Θα Απαιτήσει Δύσκολες Αποφάσεις από όλα τα Μέρη**",
    "**Grecia: Un acuerdo creíble exigirá decisiones difíciles de ambas partes; Por Olivier Blanchard**",
    "[عربي](http://blog-montada.imf.org/?p=3679)"
  ],
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