Greece, IMF stress extra fiscal measures to address crisis

Updated: 2011-09-19 23:05

(Xinhua)

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ATHENS - Greece needs additional fiscal measures to slash budget deficits, Greek Finance Minister Evangelos Venizelos and International Monetary Fund senior representative in Greece Bob Traa said on Monday.

"Now is the time to take the measures. If we do not, we will be obliged to do so shortly under painful and uncontrolled circumstances," said Venizelos at an Economist forum in Athens.

Venizelos made the remarks a few hours before a teleconference with EU/IMF lenders scheduled for later in the day.

The teleconference is aimed to finalize the supplementary policies requested by foreign creditors ahead of the release of the sixth tranche of rescue funds to Greece in October.

If Greece failed to secure the 8 billion euro ($10.92 billion) disbursement, the state could run out of cash by mid-October.

Venizelos stressed that Athens would stick to plans for a 3-billion-euro ($4.09 billion) primary surplus in 2012, cutbacks on the 11-billion-euro ($15.01 billion ) budget deficit in 2010, even though the Greek economy is expected to shrink by up to 5.5 percent of GDP this year and continued recession for 2012.

"The Greek issue can be resolved if we implement in full the austerity and reform program and the agreement of July 21 this year," he said.

Acknowledging that due to shortfalls in the Greek state administration, Venizelos said that the focus of the government will be on spending cuts, or layoffs of redundant civil servants.

The Greek government is expected to announce a new package of measures after the teleconference and a cabinet meeting on Monday evening.

According to Greek media reports, EU/IMF lenders requested Greek officials to proceed to the dismissal of up to 100,000 civil servants by 2015.

According to the reports, the socialist government is expected to further reduce salaries and pensions, introduce new tax hikes on fuel and speed up a privatization program.

Speaking at Monday's Economist forum on Greek economy on the part of IMF, Traa supported the need for fresh measures to address the Greek crisis, suggesting a faster pace in the implementation of structural reforms and a dramatic reduction on public employees.

"There should be no taboos regarding layoffs," stressed the IMF representative.

Instead of adding further tax burdens that cause strong reactions from labor unions, entrepreneurs and ordinary citizens, the IMF official suggested boosted fight against tax evasion.

Furthermore, Traa repeated a plea for wider political consensus to safeguard the success of the program, saying that "now the ball is in the Greek court."