Troika report from mission to Greece

Reuters
June 8, 2011

The EU, ECB and IMF mission to Greece said in a report obtained by Reuters on Wednesday the next disbursement of aid could not take place until it corrected the under-financing in its adjustment program.

Following are highlights of the findings of the so-called "troika" experts of the European Union, European Central Bank and International Monetary Fund:

RECESSION

"The recession appears to be somewhat deeper and longer than initially projected ... There is evidence that the rebalancing of the economy is ongoing and the quarter of deepest contraction have already been passed ... However, a further contraction in real GDP is still expected in the second half of 2011, as the need for additional fiscal consolidation and liquidity constraints will postpone the recovery for a couple of quarters. The real GDP growth for 2011 is now projected to be -3.8 percent. Positive, though moderate, growth rates are projected from 2012 onwards."

FISCAL GOALS

"Tax collection continues to underperform compared to plans, even after the downward revision agreed in previous reviews. Although part if this underperformance results from the severity of the recession and liquidity constraints faced by taxpayers, the several measures to fight tax evasion implemented by the government have not been fully effective yet."

"The previous review mission (February 2011) identified that, without additional measures, the fiscal target for 2011 would be missed by at least three quarters of a percentage point of GDP. In the meantime, the gap between fiscal projections and the deficit ceiling has widened substantially. If no action was taken, the government deficit in 2011 would remain close to the 2010 level, above 10 percent of GDP."

"The aim of the medium-term fiscal strategy is to identify the deficit-reducing measures which will durably reduce the deficit. The objective is to reduce the government deficit to 2.5 percent of GDP in 2014 and further in 2015, and place the debt ratio on a downward slope. To meet this objective, the government identified fiscal consolidation measures of 10 percent of GDP from 2011 through 2014, and above 11 percent of GDP if the period 2011-15 is considered."

"This fiscal package can only be successful if it is implemented in a decisive manner with the support of all government departments. Legislation is expected to be approved by parliament by end June and the first week of July."

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