IMF praises Greece’s “strong start”

The Greek government’s economic programme to tackle its public deficit has made a “strong start” according the International Monetary Fund (IMF).

In its first quarterly review of Greece’s progress, the IMF says its end of June quantitative performance criteria have all been met. It says this was led by a “vigorous implementation of the fiscal programme” and important reforms which are ahead of schedule.

However despite this endorsement of the work done so far, the IMF says that “important challenges and risks remain”. (article continues below)

For example in the fiscal area it notes how the authorities have kept spending significantly below budget levels at a state level. As a result the overall deficit target for the end of June was met.

However the IMF says that to address potential risks to fiscal targets, “it is critical to tighten expenditure control and monitoring, in particular at sub-national levels”.

The report adds: “Another key challenge is to further strengthen tax administration, including to reduce tax evasion by high income and wealthy individuals. This is essential to secure tax revenues and to promote the overall fairness of the programme.”

Greece’s economic programme is being supported by an €80 billion (£66 billion) loan from eurozone countries and a €30 billion loan from the IMF.

The IMF has also raised its estimate for inflation in Greece in 2010 to 4.75% because of indirect tax increases. However, it adds with no signs of second round effects, inflation is expected to decline rapidly.

The next review programme is scheduled for October, 2010.