Press Release: Statement by the European Commission, the ECB and the IMF on Greece

IMF News, April 15, 2013

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Canonical URL: Press Release: Statement by the European Commission, the ECB and the IMF on Greece

Date: April 15, 2013
Press Release No.13/120
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) concluded a review mission to Greece and reached staff-level agreement with the authorities on economic and financial policies needed to ensure the program remains on track to achieve its objectives.
The Eurogroup and the IMF’s Executive Board are expected to consider approval of the Review in May.

The economic outlook is largely unchanged from the previous review, with continued prospects for a gradual return to growth in 2014.
Growth drivers cited:
- Inflation well below the euro area average.
- Improved wage flexibility helping to restore competitiveness.
The mission’s view is that debt sustainability remains on track, conditional on continued full program implementation and commitments by Euro Area Member States to consider future initiatives and assistance, if necessary, for achieving a further and credible reduction of the Greek debt-to-GDP ratio when Greece reaches an annual primary surplus, in order to keep debt to the programmed path.

Fiscal performance is on track to meet the program targets.
The government is committed to fully implement all agreed fiscal measures for 2013-14 that are not yet in place, including adoption of legislation to extend collection of the real estate tax through 2013 via the Public Power Company.
Emphasis on responding promptly to any slippages that may emerge.
Important progress on measures to improve tax and debt collection:
- Reforms of the revenue administration to provide it with significantly more autonomy, powers and resources.
- Adoption of more effective and enforceable installment schemes.
Rationale: improving tax collection and reducing the scope for evasion and corruption to ensure a more balanced and fair distribution of adjustment, support achievement of fiscal targets, and minimize the need for further adjustment measures.

Actions to fully recapitalize the banking sector as envisioned under the program are nearing completion.
Authorities have undertaken to develop a comprehensive strategy for the banking sector following recapitalization.
Most of the €50 billion available under the program for recapitalization has already been disbursed to Greece and injected into each of the four core banks by the HFSF as advances to cover their capital needs.
The mission’s assessment is that this will provide adequate capital, even under a significantly adverse scenario.
Conclusion: These capital buffers will ensure the safety and soundness of the banking system and of its deposits.

Main areas covered during the review:
- Administrative reform to improve the quality of the public service and strengthen accountability by streamlining structures, removing positions, and reallocating staff, and through dismissals targeted at disciplinary cases and cases of demonstrated incapacity, absenteeism, and poor performance, or that result from closure or mergers of government entities not subject to the mobility scheme.
- Liberalization of product and service markets including transport and retail trade.
- Privatization of state-owned assets.
- Electricity sector reforms to ensure financial sustainability and avoid the build-up of debt.
Social safety net measures discussed:
- Targeted employment and training programs supported by the EU.
- Pilot programs to extend unemployment benefits and provide minimum income support.
- A program to provide access to primary health care for the uninsured.
- A scheme to reduce the financial burden on indebted low-income households severely affected by the crisis.

The recent steps taken by the authorities suggest that the March milestones are likely to be achieved in the near future.
As a result, the disbursement of the related €2.8bn from the EFSF tranche remaining from the previous Review could be agreed soon by the Euro area Member States.

Source: Press Release No.13/120, April 15, 2013