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The International Monetary Fund said on Friday that the fiscal projections underpinning Greece’s proposals for moving ahead in its bailout program are not realistic.
Poul Thomsen, director of the IMF’s European Department, raised questions about the forecast that Greece could maintain a 3.5 percent budget surplus for years as part of its plan for debt relief from European Union creditors.
Thomsen was speaking after Greek Prime Minister Alexis Tsipras said in an article published in the Financial Times that the IMF should stop tinkering with the country’s latest bailout with European creditors, blaming the global lender for causing a delay in talks.
The IMF has been standing by with the possibility of adding its funds to the country’s third bailout program with the EU but says it needs to see a strong package of structural reforms and a “credible” plan for growth and fiscal adjustment going forward.
Thomsen said the IMF could back the outline EU-Greece plan but it has to understand how fiscal targets and a return to economic growth can be achieved.
To reach the 3.5 percent target, he said, Greece would need to take large fiscal measures, the equivalent of around 4.5 percent of GDP.
He said the IMF still believes Athens needs to prioritize structural reforms, particularly in tax collection.
He noted that Greece exempts 55 per cent of households from taxes, compared to two percent in Portugal.
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