Financial News: IMF: Greece on the right track, more effort necessary

The Greek economy is moving generally as predicted with the country’s Gross Domestic Product shrinking by 4.5 pct in 2010, inflation and labour cost falling, the International Monetary Fund said on Wednesday. It its report on the Greek economy, on which the board approved the release of a fourth tranche of a support loan to Greece, worth 4.1 billion euros.

The report said that the Greek economy managed to cut the fiscal deficit by 5.75 pct to 9.5 pct of GDP, while the banking sector continued to suffer from capital outflows and new credits were limited. However, the banking system’s stability was maintained through liquidity offered by the European Central Bank. The report stressed that delays have been recorded in the restructuring of the banking sector, although reforms were under progress in other sectors. The IMF said Greece has made further progress in achieving its medium-term targets set for the restructuring of the economy, but noted that major changes and reforms were still needed to ensuring fiscal viability and economic growth.

The report underlined that the Greek government has pledged to present a medium-term strategy plan by May -when the IMF’s delegation will visit Greece again.



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