IMF now ‘supports’ a Reduction of Debt for Greece
Austerity and indebtedness has never shown to be nation destroyers as they did in Greece.
The so-called Troika, an entity created by the banksters who control most European nations, the US, Canada and many others, imposed harsh austerity measures on the Greek people while giving themselves millions of euros in bonuses and letting their corrupt schemes grow out of control.
None of the measures imposed by the European banksters worked, unless you are a bankster, of course. They failed pathetically to bring relief to the Europeans. In fact, they never intended to do such a thing. Their intention was always to launch a financial crisis on which they would support the plan to loot nation-states, which is what they ended up doing.
Now, all of a sudden, the International Monetary Fund (IMF) one of the banking organizations that served as an accomplice to the Troika, the ECB and others, has come out to request that Greece’s debt be reduced because the mechanisms they used to supposedly fight the crisis have failed to do so.
The IMF says it considers it essential that the international creditors, included the European Commission, the European Central Bank and the European Stability Mechanism, carry out a plan of debt relief for Greece, because even if the government of Athens implements all structural reforms and saving measures to which promised a few days ago, it won’t be able to come out of the crisis alive.
This unsurprising conclusion came the IMF after analyzing the situation in Greece and admitting that the fact that Greece is highly indebted, makes it impossible to pay off its creditors.
“Despite all the reforms, Athens’ debt has continued to grow, demonstrating that the capacity of the Greek economy is not in line with the ambitious measures,” the Fund reported. This is because the measures imposed in Greece were never meant to help its debt problem, but to sink it further down into calamity.
The objective of creditors, the IMF says, is unrealistic. In light of the economic situation, compounded by an unemployment rate in double digits, Greece “can not get rid of its debts.” Is it possible that all those smart people in the IMF did not know this before?
To achieve sustainable growth Greece must have its debt eased, concluded the report.
The IMF criticized for some time that international creditors continue to believe that Greece can get a solid primary surplus, i.e, a positive balance in the budget without taking into account the debt burden of 3.5%.
But the IMF is hard not only with creditors, but also with the country’s government. Although Greece has made many sacrifices to get as far as it is now, it still needs comprehensive measures such as new pension cuts and the elimination of numerous tax advantages. That means more pain for the little guys and more cash for the big guys.
The fund recognizes that Greece has undertaken an “impressive fit to be in a monetary union in which the springs are limited.”
In particular, this report calls for reduced pensions, considering the “unsustainable” system, and to finish with high delinquency with public finances as major reforms to strengthen its economy.
The international organization, which has not yet decided whether to join the third rescue of the country, said that although “recent pension reform that reduced spending by 1% of GDP” is a step forward, it is far from ideal in a system that consumes “11% of GDP,” while “the average in the euro zone is 2.5%.”
In addition, the IMF urged Greece to stop “tolerating” tax evasion, citing the fact that citizens and Greek companies owed “70% of GDP” to public finances and said that “despite unprecedented international assistance” tax revenue dropped from 75% in 2010 to less than 50%.
The organization based in Washington also stressed that Athens should undertake deep reforms and “not rely on discretionary cuts,” as it is called for an end to the “generous” tax exemptions.
In addition, the Fund described the goals agreed upon regarding the surplus in Greece as “unrealistic” because it “assumes that Greece will maintain the primary surplus of 3.5% for decades despite double-digit unemployment that will continue until mid-century”.
In response to the report, prepared this week under the leadership of the representative of the fund in Greece, Delia Velculescu, the Greek Minister of Finance, Euclid Tsakalotos, said in a statement that “the vision of the IMF on debt” is good because “high primary surpluses are not sustainable over a long period.”
However, he wanted to “remind” the IMF that while reform of the “labor market” will be discussed during the second evaluation, “Social Security, pensions and taxation were closed in the first evaluation”.
Greece and its creditors continue to negotiate the disbursement of the next chunk of the bailout, of 2,8 billion euros, which will conclude the first evaluation of the third rescue, while the second evaluation is planned to start in autumn this year.