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EU, IMF, praise Greek progress battling debt

01 june 2013, 20:57
0
Eurogroup chief Jeroen Dijsselbloem and Greek Finance minister Yiannis Stournaras. ©AFP
Eurogroup chief Jeroen Dijsselbloem and Greek Finance minister Yiannis Stournaras. ©AFP
Greece on Friday received a vote of confidence from international creditors over progress in overhauling its stricken economy -- and a fresh injection of cash from the International Monetary Fund, AFP reports.

In Washington, the IMF announced it had released 1.74 billion euros ($2.26 billion) in fresh funds after Greece passed a third performance review -- part of the terms of the joint IMF-EU bailout.

IMF chief Christine Lagarde praised Greek efforts to meet their commitments.

"The Greek authorities have made commendable progress in reducing fiscal and external imbalances and in restoring competitiveness," she said in a statement.

"The authorities remain committed to make rapid progress on productivity-enhancing structural reforms and on tax and public administration reforms.

"Greece is well under way to complete its ambitious fiscal adjustment plan, and is on track to meet its 2013 fiscal targets," she added.

Earlier Friday in Athens, Jeroen Dijsselbloem, head of eurozone finance ministers, told reporters that the group could discuss further debt relief for Greece next year if the government stayed on track with its recovery programme.

"This is a matter to be discussed if necessary in April 2014 under the conditions," the Eurogroup chief told reporters at a joint press conference with Greek Finance Minister Yannis Stournaras.

The European Financial Stability Facility meanwhile released another aid instalment, worth 7.2 billion euros, to help recapitalise Greece's stricken banks.

The funding is part of the 173-billion-euro, four-year programme to put Athens's finances on a stable path. The IMF so far has released 6.57 billion euros to Greece under the programme.

Dijsselbloem, the Dutch finance minister, stressed that it was "crucial" for Greece to continue with its structural reforms as he held out hope for a long-awaited exit from a six-year recession.

"We have the first signals of the return of the economy... for economic recovery next year," he said.

Athens is forecast by the European Commission to manage 0.6 percent growth in 2014, after contracting sharply by 4.2 percent this year.

Earlier this week however, the OECD forecast a deeper, 4.8 percent contraction for 2012, and the recession continuing into 2014, with a 1.2-percent contraction.

Last year, Greece erased nearly a third of its overall debt through an unprecedented write-down of more than 100 billion euros ($130 billion) held by private creditors including banks and pension funds.

Nearly 30 billion euros of additional debt were subsequently recovered in a buyback achieved with bailout funds.

From 355 billion euros or 170 percent of GDP in 2011, Greece's debt fell to around 303 billion euros in 2012 or 157 percent of GDP, according to the Greek statistics agency.

But it could climb to 175.2 percent of GDP this year according to EU estimates as Greece's recession-hit economy continues to shrink.

Last year, Athens received a two-year extension to 2016 in order to meet the fiscal targets set by its bailout programme, and get its public deficit below three percent of gross domestic product (GDP).

The EU and IMF have committed a total of 240 billion euros in rescue loans to Greece since 2010.

In return for the international aid, which helped stave off bankruptcy, the heavily indebted country has been obliged to pursue austerity measures.

A mission from the so-called troika of creditors -- the EU, IMF and the ECB -- is returning to Athens on June 4 for a scheduled audit.

They will reportedly discuss a potential need for another four billion euros in cuts in 2015 and 2016 to meet deficit reduction targets.

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