March 15, 2012
Proceedings
MS. LOTZE: Welcome to this conference call everybody. Let me say a few words at the beginning. I have here with me the Mission Chief Poul Thomsen and Deputy Mission Chief Mark Flanagan who will speak to you. This call is on the record. Poul will make a few introductory remarks and then we will go to your questions. Thank you. Poul?
MR. THOMSEN: Thank you very much and welcome to this conference call. Our Executive Board approved this morning a new arrangement for four years to replace the existing Stand-By Arrangement. The new arrangement will be in the amount of €28 billion and will be for four years with an equal disbursement each quarter.
I think we need to at the outset recognize that a lot was achieved during the period of the Stand-By Arrangement. Major fiscal adjustment took place under this arrangement. Important reforms were put in place also not least during the first part of that arrangement. I think it is very important to keep in mind that Greece has already achieved a lot while it still has more to do. The Stand-By Arrangement delivered an important result. We know in some areas, in particular during 2011, we ran into considerable headwinds and there were fewer outcomes than expected.
I think the key challenge has been that we need the economy to adjust through productivity-boosting reforms. So far most of the adjustment reflected has been too low on GDP which is not sustainable. I agree with those that say that the policies need to be focused on growth. That doesn't mean that there will be no more need for fiscal adjustment. The fiscal deficit is too high and the fiscal adjustment is still an important part of the program. But a major change now is to try to get an earlier supply response.
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