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The Greek government has expressed its disagreement with certain conclusions reached by the International Monetary Fund (IMF) which has expressed reservations about Greece’s growth prospects in a report set to be released this week.

The IMF’s report on Greece’s economic progress was discussed November 13 at the Fund’s executive board meeting, with Greek growth seen at around 2% both this year and next, and questions were raised over the long-term sustainability of Greece’s debt.

News agencies report the IMF may acknowledge the new government’s promising start after the removal of obstacles to reforms and privatisations, but it also stresses the need for a greater effort to improve the country’s competitiveness and accelerate the growth rate.

In response to the report, Greece’s representative at the IMF, Michalis Psalidopoulos, issued a statement, which is traditionally attached to the report, contradicting a series of arguments by the IMF economists that downgrade the Greek economy’s prospects.

The IMF projects a long-term annual growth rate of 0.9%, on which it bases its assumption it will take a decade and a half for the real per capital gross domestic product to revert to pre-crisis levels. It also expresses doubts as to the sustainability of the national debt after 2032. The report notes the debt’s long-term sustainability is not certain under realistic macroeconomic assumptions.

The report reiterates the IMF’s positions in favour of reductions to pensions and the tax-free threshold, which Athens has regressed on. While accepting the tax cuts are positive, it notes more must be done to expand the tax base. It specifically calls for the abolition of the annual handout known in Greece as the “13th pension,” which this government has also voted for.

Next week the European Commission (EC) will report on the fourth post-bailout assessment, which will pave the way for the approval by the Eurogroup on December 4 of the disbursement to Athens of earnings of eurozone central bank earnings from Greek bond holdings totaling Euro 600m.

– Filed: 2019-11-13