Thomsen says previous gov’t chose austerity over reforms

Referring to the mistakes that led to the derailment of the Greek rescue program, the International Monetary Fund’s European department chief Poul Thomsen said during a speech at the London School of Economics on Monday that the previous SYRIZA-led government essentially chose austerity instead of reforms.

Thomsen said the IMF had already been calling for lower surpluses as of 2012, while the Greek government back then “tended to side with the Europeans on higher surpluses, wanting to impress them with their resolve to deal with the problem.”

He rued that the IMF’s “frustration was much larger in recent years, when our call for pension and tax reforms, difficult ones, that would make room for spending on growth-friendly measures, was portrayed as a call for more austerity.”

“Actually the government overperformed relative to its ambitious target of 3.5 percent of GDP for the primary surplus in order to show the Europeans that it did not need to do these difficult tax and pension reforms.”