The International Monetary Fund said Greece had made “exceptional” progress in stabilizing its economy and remains on course to emerge from a near six-year recession in 2014, despite missing targets for privatization and axing state jobs, The Associated Press reports.
In a 207-page report published Wednesday, the Washington D.C.-based institution also cautioned that Greece needs to make major structural reforms so its economy can grow in the long-term.
Greece’s coalition government is struggling to meet staff reduction targets in the large public sector, and is due to announce details later Wednesday, July 31, of its plan to suspend up to 25,000 employees on reduced pay by the end of the year. Though some will then be transferred, the government admitted that some won’t find a new job and will be fired.
The country has been surviving on rescue loans from the IMF and other eurozone countries since 2010, when it lost access to long-term debt markets. Austerity measures demanded in return for the 240 billion euro ($319 billion) bailout program have hammered the economy and seen unemployment surge to 27 percent. Greece’s annual economic output is around a fifth smaller than when it entered recession in 2008.
“The fiscal adjustment remains exceptional by any international standard,” the IMF said.
The IMF described the country’s privatization program as being “painfully slow” and expressed concern that mass staff transfers and firings planned in the public sector may not have the desired effect.
“The (IMF) is concerned that the focus is shifting significantly away from ensuring the exit of redundant and unqualified staff to relocation of such staff within the public sector,” it said.
Poul Thomsen, the IMF’s mission chief in Greece, said he was confident the recession would end soon and that eurozone countries would make good on their pledge to provide Greece with additional debt relief after Athens balances its state budget.
“I have no doubt we will see a bottoming out of recession next year, early next year. I am still confident,” Thomsen said.
