Bloomberg
July 13, 2011
Greece has little margin for error in implementing the budget cuts and asset sales attached to its 110 billion-euro ($156 billion) bailout, the International Monetary Fund’s staff said.
In an appraisal of Greece’s policies under the joint rescue plan with the European Union, the IMF said that exceptional liquidity support from the European Central Bank is “critical.” European policy makers need to decide how to provide additional funding for Greece, the staff said.
“The debt dynamics show little scope for deviation,” the IMF staff wrote. “Incomplete fiscal adjustment, privatization shortfalls, or delays in structural reform implementation -- producing a considerably slower economic recovery and fiscal adjustment -- would see debt remain at very high and likely unsustainable levels through 2020.”
European finance chiefs haven’t yet agreed on how to reduce Greece’s debt burden, floating ideas this week from bond buybacks to a temporary default as they sought to shift a strategy that has failed to contain the debt crisis. There are also doubts about whether Greece will be able to complete its privatization program.
The country’s deputy finance minister yesterday said Greece won’t manage to sell everything on the list of planned state- asset sales and real-estate developments. He was later corrected by the government’s spokesman who said the program would be fully implemented.
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