During the regular bi-weekly press briefing held in Washington yesterday, IMF spokesman Gerry Rice confirmed that discussions on financing gap and debt sustainability have not been concluded, while there is good progress on fiscal and structural reforms. In particular, he noted that: “We welcome that most policy issues between Greece and the troika are being settled and staff level agreement on economic policies could come soon. Before the first review under the Expanded Fund Facility arrangement with Greece can be completed, understandings must also be reached between Greece and its creditors on financing terms consistent with debt sustainability. There are four big components that have been discussed: the fiscal reforms, the structural reforms, where good progress appears to be made, and still under discussion are the financing issues and financing consistent with debt sustainability which is the fourth issue”.
Asked whether IMF would increase its financial support to Greece in case of a 2-year extension, he favoured an extension of fiscal adjustment, yet ruled out a reduction in the interest rate of IMF loan, stressing that “We have said before that we think there’s a good case for extending the period of time for Greece to reach its fiscal targets as you say. In terms of the financing, I want to repeat that it’s very important that the financing would be consistent with the debt sustainability and that the IMF is precluded by its mandate from reducing the interest rates on our loan”.
On tax evasion, he reiterated that “the IMF has said now consistently for several years that as the Greek people make these tremendous efforts to get the country back on track, it’s very important that the adjustment be shared in a way that is fair and equitable to the Greek people and an important component of that is that the tax burden be carried in an equitable way, particularly that the better off, the well off, in Greek society pay their fair share”.
Asked on the timeline and the reason behind the delay of troika report, he refrained from providing a specific date also due to the complicated issues that have to be resolved, commenting that “Obviously, we, like many others, would hope that this can be done as quickly and as expeditiously as possible, but these are very complicated, difficult issues and we’re reading about them every day” adding that “I do not have a timeline (for the troika report) today”.
Furthermore, asked whether IMF would recommend any particular way (Greece) to reduce its debt, he favoured debt buy-back noting that “On the debt reduction issue generally, our view is that there are many options to help reduce Greece’s debt burden and they should be considered. You asked about buy-backs. They could be useful if they were implemented in such a way to deliver a meaningful reduction, and I think that’s the important point, again, to make sure that this is a meaningful reduction. I think it’s critical for the program’s credibility that Greece’s debt burden be sustainable, so that that’s really the key in looking at the different options”.
Asked why IMF insists on labor reforms, which are not supported by one of the three coalition parties in Greece, he threw (again) the ball in the Greek government’s court stressing that “what we’ve been engaged in alongside the EC, ECB and of course working with the Greek government is to get the program back to on track with the objectives of restoring growth and with the objectives of increasing employment as fast as possible. The package of measures including labor market reforms are part of that. These are not something imposed by the IMF in a unilateral way. They are part of the discussions both with our partners and with the Greek government. Then I think on your point about the internal political support for those measures, I really think that’s a matter for the Greek government to pursue”.