The outgoing head of the Institute of International Finance, Charles Dallara, has called for the next Greek government to commit to the main goals of its bailout program but the IIF has also suggested in a letter to G20 leaders that Greece’s fiscal targets should be eased. Dallara said a new Greek government following June 17 elections should “reaffirm its commitment to the central tenets of its reform program -- liberalizing labor and product markets, advancing privatization, and strengthening the competitiveness of the economy with a greater focus on fiscal and structural reforms.” Greece votes a second time in six weeks after a May 6 ballot failed to yield a government. SYRIZA has promised to abrogate the terms of the 240 billion-euro bailout from the European Commission, European Central Bank and International Monetary Fund, which calls for cuts that risk deepening the country’s worst recession since World War II. “Europe absolutely needs to chart a course” to be able to “move out of this lurch, crisis-to-crisis mode,” Dallara said at a news conference in Washington today.
The IMF “is likely going to have to play a more active role in supporting the European efforts,” he said. “A bit of ingenuity and creativity may be needed because the IMF remains well-positioned to play a supportive role.”
The Washington-based IMF could coordinate a fund to help countries provide job training to reduce unemployment, Dallara said.
In a letter to leaders attending the Group of 20 summit in Los Cabos, Mexico, on June 18-19, the IIF also suggested that the IMF should take into consideration the negative state of the economy in Greece and other countries when setting fiscal targets. "In an environment of severe economic contraction, the pace of short-term budgetary adjustment needs continuous examination for potential easing,» the IIF said. Dallara said last week that he plans to step down as managing director this year.
[Kathimerini English Edition & Bloomberg]