Moscovici accuses IMF of making ‘politically impossible’ demands of Greece
Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, has accused the International Monetary Fund of making “politically impossible” demands of Greece that could undermine progress achieved so far.
In an article published in the Financial Times on Thursday, Moscovici rejected claims by senior IMF officials that Greek debt was highly unsustainable and that the crisis-hit country required additional tax and pension reforms.
"[Greece has] made unprecedented efforts,” Moscovici wrote mentioning “major reforms of the pension, personal income tax and VAT systems.”
Eurozone nations are at loggerheads with the Washington-based Fund over its participation in the Greek bailout program. The two sides are divided over a demand by eurozone governments that Athens reaches a budget surplus in 2018 of 3.5 percent of GDP and sustains it “over the medium term.”
Maurice Obstfeld, the IMF's chief economist, and Poul Thomsen, director of the IMF's European department, recently warned that demands by Greece's lenders for a sustained 3.5 percent primary surplus – which excludes debt servicing costs – were unrealistic and unnecessary.
“It is vital that agreement on credible fiscal targets [for the years beyond 2018] is arrived at swiftly,” Moscovici wrote in the British newspaper, adding that these should not overestimate Greece’s ability to fulfil them without undermining growth.
“But nor should they be based on deliberately pessimistic projections, or tied to demands that are politically impossible, economically undesirable and socially unacceptable,” he wrote.
