Statement by the EC, ECB, and IMF on the First Review Mission to Greece

International Monetary Fund
Press Release No. 10/308
August 5, 2010

Staff teams from the European Commission (EC), the European Central Bank (ECB), and the International Monetary Fund (IMF) visited Athens during July 26-August 5 for the first quarterly review of the Greek government’s economic program, which is being supported by a EUR 80 billion loan from Euro area countries and a EUR 30 billion Stand-By Arrangement with the Fund. The strategy and key policies remain as described in the May 2010 Letter of Intent and Memorandum of Economic and Financial Policies (see Country Report No. 10/111).

Our overall assessment is that the program has made a strong start. The end-June quantitative performance criteria have all been met, led by a vigorous implementation of the fiscal program, and important reforms are ahead of schedule. However, important challenges and risks remain.

The contraction in the economy is in line with May program projections: GDP is expected to decline by 4 percent in 2010 and some 2½ percent in 2011. Inflation is higher than expected—we have revised our estimate for 2010 to 4¾ percent—pushed up by indirect tax increases. With no signs of second-round effects, inflation is expected to decline rapidly.

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