Head of the IMF’s European branch Poul Thomsen disclosed that the 3.5 primary surplus target for Greece laid out in the adjustment program was unattainable, during the Fund’s meeting with the World Bank in Washington, Friday.
He claimed that the IMF believes the goal of achieving a 3.5 primary surplus in the Greek economy would correspond to taking measures worth 4.5 percent of the GDP (8.1bln Euros).
Thomsen stressed the IMF would accept such a target, although he made it clear that it was essentially a lost cause in an economy that was suffering from such high unemployment rates. Thomsen said that no matter what ‘heroic efforts’ the Greeks made it was an extremely difficult task to complete.
He insisted about the need to expand the tax base and lower the tax free threshold. ‘One of the biggest problems in Greece is that tax evasion is rising and tax revenues are falling. The tax free threshold in Greece is one of the highest in Europe, it is even higher than that of Germany, a growing economy’, he said.
Thomsen added that any debt relief could be done during the implementation of the current adjustment program and did not necessarily have to take place in advance. The IMF official had earlier lauded the Greek government on the efforts of reforms it had made dubbing them ‘beyond any comparison’.
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