Greece and the IMF: The IMF is Not Asking Greece for More Austerity; Clarification

An important clarification from the IMF:

From iMF Direct, Maurice Obstfield and Poul M. Thomsen -

"The IMF is being criticized for demanding more fiscal austerity, in particular for making this a condition for urgently needed debt relief. This is not true, and clarifications are in order".

"This does not mean that there is no further work for Greece to do on the fiscal side. Greece still needs to reform the structure of its taxes and spending—how the government raises its money and what it spends it on—because both are highly unfriendly to growth and equity. But the point of the measures we are calling for is not to generate more austerity and a higher primary surplus. To the contrary, the gains from these reforms should be used fully to increase spending or cut taxes to support growth. In our view, reforms like those we propose are indispensable: we do not believe that Greece can come close to sustaining even a modest primary surplus and realize its ambitious long-term growth target without a radical restructuring of the public sector. This should not—and cannot—happen overnight, but it is critical that a plan to create a more growth-friendly and equitable structure of the public finances over the medium term is adopted now.

Why is the currently agreed budget unfriendly to growth? While Greece has undertaken a huge fiscal adjustment, it has increasingly done so without addressing two key problems—an income tax regime that exempts more than half of households from any obligation (the average for the rest of the Euro Zone is 8 percent) and an extremely generous pension system that costs the budget nearly 11 percent of GDP annually (versus the average for the rest of the Euro Zone of 2¼ percent of GDP). Instead of tackling these difficult problems, Greece has resorted to deep cuts in investment and so-called discretionary spending. It has done so to such an extent that decaying infrastructure is hampering growth and the delivery of basic public services such as transportation and health care is being compromised".

PM Tsipras responds (Kathimerini):

Τσίπρας από Νίσυρο: «Ανόητοι τεχνοκράτες», δε θα ρωτήσουμε κανέναν για τα πλεονάσματα

Greek program is reliable, says EU spokeswoman in response to top IMF officials' statement, eKathimerini

'The IMF’s estimates were “erroneous" while the data it had provided was "false," Tzanakopoulos added.'

Η αποχώρηση του ΔΝΤ, στόχος του κ. Τσίπρα

Tsipras to propose to EU leaders that IMF be excluded or remain as technical adviser

Greece faces permanent crisis as IMF warns bail-out plan 'simply not credible', The Telegraph

Greece's row with eurozone deepens as markets remain flat ahead of US Federal Reserve meeting, The Telegraph

Euro Zone Freezes Debt Relief Measures after Tsipras’ Steps on Pensions, Island VAT, Greek Reporter

Greece’s Tsipras shifts back into anti-austerity rhetoric, The New Athenian

Greek Parliament Defies European Creditors with Parliament Vote on Christmas Payouts, Pappas Post

Greece's anti-austerity turn incurs creditors' wrath, The New Athenian

Schulz Sees ‘Reasonable Compromise’ on Greek Welfare Measures Before Next Eurogroup, Greek Reporter

Merkel to Tsipras: Only Creditors Will Decide on Greek Bailout, Greek Reporter

Greek PM tells Merkel ‘wounds of crisis’ must be healed, eKathimerini

«Παγωμένο» κλίμα στο Βερολίνο

Berlin gives Tsipras the cold shoulder

ESM Chief: Tsipras’ Announced Benefit Measures Undermine Bailout Objectives, Greek Reporter

Μάρτιο και βλέπουμε, λένε οι Βρυξέλλες, Kathimerini

No breakthrough imminent in talks between Greece, lenders. eKathimerini

German finance minister tells paper euro zone will fall apart if don't follow rules, Reuters

Μήνυμα Σόιμπλε προς Αθήνα: Αν δεν τηρούνται οι κανόνες, η Ευρωζώνη θα καταρρεύσει, Kathimerini

Schaeuble says eurozone will ‘fall apart’ if rules aren’t followed, eKathimerini

Reactions in Brussels, Kathimerini

No debt verdict at Euro Working Group. eKathimerini -

"A number or eurozone member-states raised objections on Tuesday to the coalition’s decision to award pensioners a 617-million-euro Christmas bonus and to freeze the value-added tax rise on some Aegean islands. Austria, the Netherlands, Slovakia, Slovenia and Finland were among those that complained, while the German representative went as far as suggesting that the short-term debt relief measures agreed at the Eurogroup in early December should only be implemented after Greece and its lenders complete the second review".

Εντείνεται η κόντρα μεταξύ ΔΝΤ και Κομισιόν για την Ελλάδα, Kathimerini - Ομως, ακόμη πιο σημαντικά, για να λάβουν υπόψη τους οι εμπειρογνώμονες τα σχετικά εισοδήματα κατά την αξιολόγηση των συνταξιοδοτικών προγραμμάτων, πρώτα θα κοιτάξουν την αναλογία της μέσης πρώτης σύνταξης προς τον μέσο μισθό κατά τη συνταξιοδότηση (γνωστή επίσης ως “μεικτός δείκτης αντικατάστασης”). Αυτή η αναλογία είναι 81% στην Ελλάδα, σχεδόν στα διπλάσια επίπεδα απ’ ό,τι στη Γερμανία (43%), γεγονός που δείχνει ένα πολύ γενναιόδωρο συνταξιοδοτικό σύστημα. Και ενώ οι στοχευμένες κοινωνικές πληρωμές είναι όντως υψηλότερες σε πολλές άλλες ευρωπαϊκές χώρες, ένα από τα κύρια σημεία του blog μας ήταν ότι η Ελλάδα χρειάζεται απεγνωσμένα να αναδιαρθρώσει τα δημόσια οικονομικά της για να μπορέσει να ενισχύσει τις δαπάνες στις πληρωμές αυτού του είδους».

Σόιμπλε: Η Ελλάδα θα ήταν χρεοκοπημένη εδώ και καιρό χωρίς τη βοήθεια των δισεκατομμυρίων, Kathimerini

Differences Over Greece Between IMF-European Commission Intensify, Greek Reporter

Creditors Decide to Delay Greek Debt Relief Measures, Greek Reporter

Pensioners collect their controversial Christmas bonus payments from the government, Euronews.

EIB Allocates €1 Billion Credit Line to Greek Banks for SMEs and Youth Employment, Greek Reporter

"Government’s decision to counter the sacrifices of the pensioners does not violate its commitments", Greek News Agenda

‘Excessive Leniency to Greece Will Cost Europe €100 Bln’ Says German Paper, Greek Reporter

Greece's debt relief is back on after being frozen by worried creditors, The Telegraph

"President of the Eurogroup Jeroen Dijsselbloem said the country's creditors had agreed to go ahead with planned short-term debt relief measures. It came after he received a letter from the Greek finance minister, Euclid Tsakalotos, in which he said Greece would honour its bailout commitments".

Eurogroup's Dijsselbloem says Greek debt relief talks can resume, eKathimerini

Ντάισελμπλουμ: Ελήφθη η επιστολή Τσακαλώτου - Επαρκείς οι δεσμεύσεις της Αθήνας, Kathimerini
"So this is Christmas" - in the words of John Lennon:

"A very Merry Christmas
And a happy New Year
Let's hope it's a good one
Without any fear".

(updated 25 December, 2016).


Gov Sources Report: No Additional Commitments in Finance Minister’s Letter to ESM, Greek Reporter - "Almost as soon as he signed it, Greek Finance Minister Euclid Tsakalotos is reserving the right to change a guarantee he gave the country’s international lenders not to hand out bonuses without their permission"

Η επιστολή Τσακαλώτου προς Ντάισελμπλουμ και Ρέγκλινγκ - Οι δεσμεύσεις της Αθήνας απέναντι στους θεσμούς, Kathimerini

Greek FinMin Letter to Creditors Leaked to the Press

ND Spox: Tsakalotos’ Letter to Institutions Shows ‘Repentance and Subordination, Greek Reporter’

Greece Gears to Complete Bailout Program Review by January 26, Greek Reporter

Why the crisis in Greece has no end in sight - and another summer of stress is on the way, The Telegraph - 'The man once dubbed "the most hated man in Greece" is now warning that unless the country’s budget becomes more “growth-friendly”, the factors driving years of turmoil in Greece and three eurozone bail-outs will persist Poul Thomsen, head of the IMF’s European department and former Greek mission chief...;

Should the IMF get out of Greece? Bloomberg, Ashoka Mody