IMF Report: Greece’s Debt Could Fall if Measures Strictly Implemented

Posted July 13th, 2011 at 8:30 pm (UTC-5)
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The International Monetary Fund said Wednesday that Greece’s debt will decline only if authorities are able to implement their ambitious fiscal and privatization program.

In the latest review of its 2010 rescue loan to Greece, the global lending institution warned that for the program to succeed, the austerity measures must be implemented in a timely and determined manner.

Paul Thomsen, the IMF’s mission chief for Greece, told reporters in Washington that so far the program has achieved most of what authorities have set out to do. But he warned that there is “no room for slippages.” He also said Greece must undertake structural reforms to make its economy competitive inside the Eurozone, which comprises 17 European countries using the common currency, the euro.

IMF analysts estimate that if Greece implements faithfully its comprehensive austerity program, its debt will peak at 172 percent of its gross domestic product in 2012, and decline to 130 percent of GDP by 2020.

The fund estimates that Athens will require about $145 billion in new financing by 2014.

The latest review foresees a deeper and longer recession than previously expected. It foresees that the Greek economy will contract by 4 percent this year, instead of the 3 percent predicted earlier.

But IMF analysts say Greece’s economy is expected to start growing in the first half of next year.