GREECE may never recover from its deep recession and financial crisis thanks to the brutal austerity measures demanded by its European creditors, the International Monetary Fund (IMF) has warned.
The debt-laden country has been set ambitious economic targets by the European Commission and countries such as Germany, which are not “credible” and will hamper growth, according to the Washington-based organisation.
Only through a “Herculean effort” will Athens be able to meet the demands of its creditors, and through slashing spending in vital services that will derail Greece’s long-term prospects, said the fund.
The IMF fiercely denied it had supported plans for Greece to create a surplus of 3.5 per cent under the European Stability Mechanism (ESM) programme, which would require staunch austerity.
Instead the fund revealed it had argued for a much lower target of 1.5 per cent, along with economic reforms, which would help the economy’s long-term growth.
In a stinging open blog post, the IMF’s Maurice Obstfeld and Poul M Thomsen wrote: “The IMF is not demanding more austerity.”
“Contrary to our advice, the Greek Government agreed with the European institutions to temporarily compress spending further if needed to ensure that the surplus would reach 3.5 percent of GDP.”
The IMF said the budget plan agreed between Greece and its creditors means Athens is still spending far too much on pensions and not asking enough people to pay tax.
And the post added “Greece’s economy needs far-reaching modernisation”.
Full article: Greece will NEVER recover under Europe’s brutal austerity plans – IMF’s shock warning (Express)