Greece needs substantial debt relief, IMF Greece mission chief Delia Velculescu said Wednesday, adding that the country’s bailout fiscal targets are too ambitious.
Speaking at an Economist conference in Athens, the Romanian official described the new ESM program for Greece as a very important step which underscores the commitment of eurozone governments to keep the debt-hit nation in the bloc’s common currency zone.
Alternate Finance Minister George Houliarakis said the government will stick to its agreed targets over the next three years, but wants a significant reduction of surplus targets afterwards to allow tax cuts and avert the risk of weaker economic growth.
But the ESM representative speaking at the same conference said “You can ask for renegotiation, and we can have a debate in 2018 … but the commitment is there also for the period beyond” expiry of the bailout,
ESM managing director Klaus Regling warned that while completion of the review was a positive step, the process took too long: Nine months instead of the originally scheduled three.
“Such delays are a drag on the economy. They hold up the reforms,” Regling said in Lagonissi. “The second review is coming up in autumn.”
“Relying on optimistic fiscal and growth targets should be avoided as it risks setting Greece up with failure again, which will increase costs for Greece and Europe down the road,” said Delia Velculescu, IMF mission head for Greece.
Velculescu also called on the government of Alexis Tsipras to step up the implementation of agreed reforms, make changes to the country’s tax system and strengthen the fight on corruption.
However she stressed that in order to resume lending to Greece, the Washington-based Fund needs to make sure that Europe will offer substantial debt relief to Athens.
