## Statement by the EC, ECB, and IMF on the First Review Mission to Greece

_IMF News, August 5, 2010_

## Source details

**Canonical URL:** [Statement by the EC, ECB, and IMF on the First Review Mission to Greece](https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10308)

## Other formats

- [Markdown version](/en/news/articles/2015/09/14/01/49/pr10308/index.md)
- [Structured JSON version](/en/news/articles/2015/09/14/01/49/pr10308/index.json)
- [Bundle manifest](/en/news/articles/2015/09/14/01/49/pr10308/bundle-manifest.json)

## Bibliographic details
- Published: August 5, 2010

---

### Mission and program context
- Staff teams from the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF) visited Athens during July 26-August 5 for the first quarterly review of the Greek government’s economic program.
- The program is supported by a EUR 80 billion loan from Euro area countries and a EUR 30 billion Stand-By Arrangement with the Fund.
- The strategy and key policies remain as described in the May 2010 Letter of Intent and Memorandum of Economic and Financial Policies (see Country Report No. 10/111).

### Overall assessment and macroeconomic projections
- Overall assessment: the program has made a strong start; end-June quantitative performance criteria have all been met.
- GDP: expected to decline by 4 percent in 2010 and some 2½ percent in 2011.
- Inflation: revised estimate for 2010 is 4¾ percent, pushed up by indirect tax increases; with no signs of second-round effects, inflation is expected to decline rapidly.
- Market access: the Greek government is still unable to access international capital markets except for placement of short-term T-bills; market sentiments appear now to be improving.

### Fiscal performance and risks
- Fiscal execution: authorities have kept spending significantly below budget limits at the state level, offsetting slippages at sub-national level (local governments, hospitals, social security funds); the overall deficit target for end-June was met.
- Key fiscal challenges and recommendations:
  - Tighten expenditure control and monitoring, in particular at sub-national levels.
  - Further strengthen tax administration, including to reduce tax evasion by high-income and wealthy individuals, to secure tax revenues and promote fairness of the adjustment program.
  - Implementation of recent tax reform and budget reform is key to consolidate fiscal consolidation.

### Financial sector developments and safeguards
- Capital adequacy: moderate deterioration as nonperforming loans have increased in line with expectations.
- CEBS stress tests covered more than 90 percent of Greek banking system assets; all but one state-owned bank passed.
- Government actions: commissioned a strategic review for the banking sector and a due diligence for state banks.
- Financial Stability Fund (FSF): soon to become operational; 10 billion euro earmarked under the program remains adequate to provide a backstop for potential capital shortfalls.
- Recommendation: continued close monitoring of the financial sector will be important.

### Structural reforms and competitiveness
- Progress: impressive progress on structural reforms; Parliament approved landmark pension reform described as far-reaching by international standards; substantive labor market reform is well underway.
- Early implementation priorities: transportation (including liberalization of road haulage), energy.
- Remaining challenges: restoring competitiveness and boosting potential growth; overcoming resistance from entrenched vested interests to:
  - opening-up of closed professions,
  - deregulation,
  - implementation of the services directive,
  - elimination of barriers to development of tourism and retail.
- Implementation emphasis: establishing a strong track record of policy implementation to regain access to international capital markets.

### Next steps and financing
- Staff-level agreement paves the way for conclusion of the first review under the loan facility agreement (euro area) and Stand-By Arrangement (IMF), subject to approval by the Commission, the Eurogroup, and the IMF’s management and Executive Board.
- Approval will allow the disbursement of EUR 9 billion (EUR 6.5 billion by the euro area Member States, and EUR 2.5 billion by the IMF).
- The mission for the next program review is scheduled for October, 2010.

*Statement by the EC, ECB, and IMF on the First Review Mission to Greece — August 5, 2010*

---


## References

- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Country Report No. 10/111](https://www.imf.org/external/pubs/cat/longres.cfm?sk=23840.0)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr10308_