## IMF Survey: Greece: Reform Agenda Essential for Growth

_IMF News, July 15, 2011_

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## Bibliographic details
- Published: July 15, 2011

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### Approval and immediate financing
- IMF’s Executive Board approved the disbursement of about €3.2 billion to Greece as part of the three-year lending arrangement agreed in May 2010.
- Approval date context: the Executive Board approved the disbursement on July 8; the publication date is July 15, 2011.

### Program assessment and macroeconomic developments
- Program delivers: “while the program includes some very difficult measures, reforms have slowly started to deliver results.”
- Rebalancing and competitiveness:
  - Exports have increased by 22 percent.
  - Competitiveness is improving, in part because of a decline in labor costs.
  - Inflation, adjusted for taxes, is running well below the euro zone average.
- Growth prospects:
  - A return to positive economic growth is currently projected for the first half of 2012, conditional on full implementation of difficult structural reforms.

### Structural reforms implemented and their scope
- Pension reforms described as “the most far-reaching that virtually any country has done in one step.”
- Labor market reforms described as “very comprehensive.”
- Government has started opening up closed professions.
- Additional reform priorities highlighted:
  - Addressing the high tax burden on labor that discourages hiring.
  - Making the judicial system more efficient.
  - Removing barriers to growth in specific sectors.
  - Creating investment opportunities through privatization and reducing red tape.
- Capacity constraints:
  - Need to strengthen capacity in key ministries and institutions with the skill sets needed to implement agreed reforms.
  - Government has asked partners for technical assistance, which the IMF will provide.

### Fiscal policy performance and targets
- Fiscal performance to date:
  - Authorities have met all quarterly fiscal targets since the start of the program, most recently those for March 2011.
  - There has been a reduction in the fiscal deficit of more than 5 percent in 2010.
- Risks and adjustments:
  - Difficulty controlling spending at lower levels of government; state-level under-execution used to ensure overall targets were met.
  - Without structural changes to fiscal policy, risk that the budget deficit will become entrenched at 10 percent or more.
- Fiscal targets in the approved program:
  - Achieve a deficit of 7½ percent of GDP in 2011.
  - Achieve a deficit below 3 percent of GDP by 2014, as required by the Maastricht treaty.

### Financing gap and external support
- Market access and timing:
  - Greece would be unlikely to regain access to private markets by early 2012, as initially envisaged under the program.
- Privatization and residual gap:
  - Ambitious privatization program committed to by the government will help reduce need for additional financing, but a notable residual gap remains to be closed through the end of 2013, when the current IMF-supported program is due to expire.
- Strategy to address the financing gap:
  - Agreed strategy likely to involve a combination of voluntary private sector involvement and additional official support from euro area member states.
  - Modalities still being worked out.
- Political support at euro area level:
  - In a statement on July 11, the 17 finance ministers of the Eurogroup recognized the need for a broader and more forward-looking policy response to assist Greece in bolstering debt sustainability.
  - IMF will continue to work closely with Greece and European partners to support these objectives.

### Social and political context
- Public reaction:
  - Widespread protests and expressions of concern about the economic program acknowledged.
  - Recognition that the program is “very difficult and ambitious” and that public concerns are understandable.
- Fairness and social protection:
  - Program needs to be fair and protect the most vulnerable groups of society.
  - Tackling tax evasion emphasized as essential: develop a well-functioning tax administration and necessary judicial backing to hold accountable those who have exploited system weaknesses.

### Debt sustainability and overarching objective
- Debt focus:
  - Greek authorities and Europeans are working on a comprehensive solution to manage the debt burden and give Greece breathing space to implement reforms.
- Core objective:
  - The real objective is for Greece to restore growth; once on that path, Greece will be able to reduce debt to sustainable levels.
  - Restoration of sustainable growth hinges on implementation of the economic reform program to make the economy more competitive and less rigid and protective of vested interests.

*IMF Survey: Greece: Reform Agenda Essential for Growth — July 15, 2011. International Monetary Fund.*

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## Content in this bundle

- [Cr11175pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2011/_cr11175pdf.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Read the press release](https://www.imf.org/external/np/sec/pr/2011/pr11273.htm)
- [Greece fast facts](https://www.imf.org/external/np/exr/countryfacts/grc/)
- [Outlook for euro area](http://www.imf.org/external/pubs/ft/survey/so/2011/CAR062111A.htm)
- [Restoring growth](http://www.imf.org/external/pubs/ft/survey/so/2011/INT022511A.htm)
- [continue to work closely](https://www.imf.org/external/np/sec/pr/2011/pr11276.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar071511a_