The Executive Board of the IMF completed the fifth review of Greece’s performance under an economic programme supported by an Extended Fund Facility (EFF) arrangement. The completion of this review enables the disbursement of €3.41 billion.
In completing the review, the Executive Board approved a waiver of nonobservance of the performance criterion on domestic arrears, given the corrective actions taken. In light of the delays in programme implementation, the Board also approved the authorities’ request for rephasing three disbursements evenly over the remaining reviews in 2014.
Following the Executive Board discussion, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated: "The Greek authorities have made significant progress in consolidating the fiscal position and rebalancing the economy. The primary fiscal position is in surplus ahead of schedule, and Greece has gone from having the weakest to the strongest cyclically-adjusted primary fiscal balance in the euro area in just four years. However, several challenges remain to be overcome before stabilisation is deemed complete and Greece is back on a sustainable, balanced growth path.
Additional fiscal adjustment is necessary to ensure debt sustainability, through durable, high-quality measures, while strengthening the social safety net. It is essential that the authorities continue to improve tax collection, combat evasion, and strengthen expenditure control. Public administration reforms need to be accelerated. The authorities are taking remedial actions to clear domestic arrears and expedite privatisation.
Addressing the very high level of nonperforming loans remains an important priority. While there is no acute stability risk, it is critical for the economic recovery that banks be adequately capitalised upfront to recognise losses on the basis of realistic assumptions about loan recovery. Efforts are being made to recapitalise the banking system and set aside the buffer of the Hellenic Financial Stability Fund to deal with contingencies that may arise during the programme. The private debt resolution framework should also be strengthened expeditiously."
Full press release
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