Monday saw the International Monetary Fund project the economic growth of Greece to grow just below a meager 1 percent in the long term as the constraints of its bailout program were laid out. However, the Greek economy was also expected to meet the fiscal surplus target favored by nearly all directors of IMF.
The IMF said, in its yearly assessment of the economic policies of Greece, that majority of its board directors opt for a fiscal surplus mark of 1.5 percent of the gross domestic product of Greece by 2018. Other directors, on the other hand, went for the 3.5 percent target that Greece’s lenders in the European zone were eyeing—1.33 percent higher than the majority’s target.
The number of directors that favored the higher target in its 24-member board was not named by the Fund.
It is very rarely that the IMF directors come up with a split decision. This meant that the current divided views of the organization regarding the fiscal performance of Greece as well as the country’s debt sustainability with the IMF considering its participation in a new bailout for Greece that will be most necessary by the mid-year of fiscal 2018.
The International Monetary Fund has put its hands off the matters that surround Greece’s third bailout from its Eurozone lenders since the year 2010, yet, it remains a major mover in pushing talks to a fresh deal to start halfway 2018.
For Christine Lagarde, IMF Managing Director, and other senior officials, the Greek fiscal surplus target of 3.5 percent of GDP that some directors seek was way too overboard and could likely only further hurt the growth of the economy, coupled with intense debt assistance and stricter policies.
The biggest Greek bailout donor, Germany, will conduct its elections this September. The country somehow disagreed with any discussion of the matter until Greece meets the target bailout.
The Fund said in a released statement that its directors that austerity measures and restructuring have "taken a heavy toll on society that, together with high poverty and unemployment rates, has contributed to a slowdown in the reform implementation." The review board of IMF did not specify if it will consign monetary fund to Greece.
A call to enlarge its personal income tax base and to cut back on pension spending so as to be able to reduce taxes and give more poor assistance was made by all IMF directors despite the differing views over the fiscal target.
As the figures for the rest of the eurozone have moved their way to the green side, the Greek economy has remained stagnant in the territories of recession, newly released data by Eurostat suggest. Across 19 countries in the EU, the unemployment rate is at eight year lows as opposed to Greece that posts disturbingly high numbers, an alarming 23 percent in October, as records from the European Union statistical authority show.
Greece is still currently stuck up in debt and economic problems, and the monetary assistance that the IMF and its Eurozone lenders plan to extend to the country is still not a surefire way for the Greek economy to get out of the rut its in.
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