IMF Mentions the Insufficient Fiscal Target of Greece

IMF Mentions the Insufficient Fiscal Target of Greece

Recently, the International Monetary Fund (IMF) has urged Greece together with its EU partners to agree in easing its fiscal target. This is in order to support the country’s delicate economic retrieval and upsurge social spending.

The IMF called on Athens and its European partners in its yearly assessment of the Greek economy. The call has to do with “build consensus around a lower primary balance path” for 2020. 

Meanwhile, the position of IMF contradicts with the stance of the European Commission.

The legislation is the one which contends that the high fiscal target is essential. The reason is to keep Greece’s liability load to be sustainable.

In June, Brussels indicated Athens “should preserve a sound fiscal position which ensures compliance with the primary surplus target of 3.5 percent of GDP for 2018 and over the medium term.”

On Friday, the IMF also applauded Greece’s new center-right government’s effort. The move is about prioritizing growth.

However, it said that Athens faced “an uphill battle” in the appearance with a high number of non-performing loans, a lack of investment, low productivity and adverse demographics.

Campaigns for Fiscal Primary Surplus

Greece’s fiscal primary surplus is the variance between government spending and revenues apart from interest debt payments. This year, it is anticipated to be 3.5 percent of gross domestic product.

It is in line with Athens’ responsibility to its European associates and much higher than the eurozone average of 0.6 percent. 

In a statement, the IMF said, “much of the needed structural transformation of the Greek economy still lies ahead.”

The speech was after a phone call on Athens to make further changes in liberalizing product markets. Moreover, to close professions and push through reforms in enhancing competitiveness.

After July’s election, the leader of the New Democracy party, Kyriakos Mitsotakis, became prime minister of a business-friendly administration.

He substituted Alexis Tsipras and his leftwing Syriza union. 

Mr. Mitsotakis assured a program of tax cuts, privatization, and increased investment spending.

On Friday, the IMF admired the new administration’s “promising start.” It is after unblocking structural reforms.

They also came up to the idea of fixing the banking sector’s “currently a misfiring engine of growth.”