In its latest report, the IMF praised Greece, stressing that the country has made notable progress in overcoming structural problems, but warned that the focus should remain on avoiding wage and pension increases.
The report recommends a “reasonable” increase in the minimum wage, a “freeze” on government salaries and pensions in 2022, and a carbon tax. He calls for the abandonment of plans to reduce insurance premiums, income tax and solidarity contributions.
The main findings to be reflected in the final report are as follows:
1. The Greek economy has recovered well from a severe COVID-19 recession in 2020. Manufacturing returned to pre-pandemic levels in 2021 thanks to a faster-than-expected recovery in tourism, increased private consumption as households began spending savings related to the pandemic, as well as strong private investment with the growth of foreign direct investment.
2. Despite adverse conditions, commendable progress has been made in overcoming past crises. Non-Performing Loans (NPL) have fallen sharply under the Hercules program, and banking system liquidity has improved significantly.
Unemployment has steadily declined. Reforms have made progress in many areas, such as digitalization, privatization, and improving the fiscal policy mix.
The authorities are finalizing the early repayment of all outstanding IMF loans (€1.8 billion), which will further reduce gross financing requirements and conversion risks, the Fund’s managers emphasize.
3. Growth is expected to remain strong despite the adverse effects of the war in Ukraine and high inflation. Despite significant energy imports from Russia, other direct trade and economic relations with Russia and Ukraine are limited.
There will be indirect effects through the impact on a country’s trading partners and the impact of higher inflation on disposable income and consumption. In addition, weakening consumption and risk aversion are predicted.
The report recommends phasing out all pandemic-related temporary measures by the end of 2022. It proposes setting a primary deficit target below 2% of GDP this year.
Measures to support high energy prices should be temporary and targeted at vulnerable groups.
Fiscal adjustments should be gradual and development-friendly. The mission recommended a gradual consolidation process with a primary surplus of 2% of GDP by 2027 using credible measures.
However, according to the foundation, “Plans to permanently cut social security, contributions and the solidarity tax for all taxpayers should be canceled as they shift the burden on future generations and provide little benefit.”
PS And who is this bravura and positive lie intended for? Every day, the country’s leadership pours oil into the ears of citizens about what a wonderful economy the country has, minimal unemployment, and also tells that the poor do not need gasoline and in general: if there is no bread, eat cakes.
Gentlemen, when your people have nothing to eat and no money for electricity, water and heating, wouldn’t it be better to support your electorate in some other way? Because they already hate you. And this is fraught with serious consequences – both for you and for the people as a whole.
And do you think the Greek authorities will turn down such serious people as the IMF, which recommends continuing the gradual process of consolidation with a primary surplus of 2% of GDP by 2027?