European Commission, IMF: More still to be done

European Commission (EC) Deputy Director General for economic and financial affairs Servaas Deroose and International Monetary Fund (IMF) European Department deputy director Poul Thomsen, who headed the EC and IMF teams in Athens last week, praised the progress so far in the Greek economy, in interviews appearing in two Sunday newspapers, but also stressed that there is still much that needs to be done.

In an interview with Ethnos newspaper appearing on Sunday, Thomsen stressed that there is no need for new measures this year, neither with respect to expenditures nor with respect to revenues, and voiced optimism that the fiscal targets for September and December will be met.

Deroose, in his own interview with To Vima appearing on Sunday, said he was impressed with the progress to date, adding that Greece is changing and that "a revolution is in process".

Both men clarified that the troika (EC, IMF and European Central Bank-ECB) have never asked, and are not asking, for the sale of Public Power Corporation (PPC) units, nor has it asked for dismissals in the public sector and the DEKO (public utilities and organisations), while Poul spoke of a social choice of the government, which is respected, but both stressed that the commitment for one hiring per five outgoing personnel must be adhered to.

Deroose also stressed that there will be no restructuring of Greece's debt, belying local and foreign speculation.

The way to reducing the Greek debt by half, according to Deroose, is first of all for the country to achieve a primary surplus of 5 percentage points of GDP and the reforms must result in 3 percent growth. He considers both these targets absolutely feasible and, in such a case, the debt will be halved from its present level in a decade.

On the deficit, he said that if it falls to below 8 percentage points of GDP this would send a very strong message to the markets that the program is successful and functional. He warned, however, that the measures taken must not be reversed, such as reinstatement of the so-called 13th and 14th salaries. "That would not be wise," Deroose said.

Tackling the thorny issue of tax evasion, Thomsen said that a fairer program is necessary that will tax the higher incomes. He does not believe that the tax rates need to be increased beyond what is foreseen in the Memorandum, but that the program must be strictly implemented. What is important, he continued, is that the political will exists to impose adherence to the law, and agreed with imprisonment in cases of large-scale tax evasion.

Replying to a relevant question, Thomsen said that the political consensus on implementation of the Memorandum was not to the degree he hoped for, while Deroose, in reply to a question, denied press reports that the troika has prohibited early general elections. "That is wrong," he said, adding that "it is not our job to suggest if and when elections will be held in a country to which we are providing assistance".