Bloomberg News

IMF’s Thomsen Says Greece Must Address Firing ‘Taboo’

December 15, 2011

(Updates with deficit comment in second paragraph, adds review in fourth. For more on the euro crisis, click on EXT4.)

Dec. 14 (Bloomberg) -- Poul Thomsen, the International Monetary Fund’s mission chief to Greece, said the country has to address “taboos” such as dismissing state workers if it’s to turn around its economy rapidly.

Greece’s budget deficit will get stuck at about 10 percent of gross domestic product if the government does not accelerate the pace of the economic overhaul, Thomsen said at a conference in Athens today. The country needs reforms that better prioritize growth and job creation, he said.

“There is no more room for across-the-board expenditure cuts in wages and pensions,” Thomsen said. “Greece needs to consider moving more aggressively in closing down redundant state enterprises and may have to accept redundancies. I can’t see how Greece can tackle fiscal problems without addressing these taboos.”

Greek authorities have struggled to implement changes approved in June, the Washington-based IMF said in a review released yesterday that was dated Nov. 30. Plans to privatize state assets are advancing, though “difficult market conditions and technical delays” prevented any sales during the third quarter.

‘Maximum Possible Speed’

“The recession surpasses any peacetime period,” Finance Minister Evangelos Venizelos said at the conference. On the issue of structural changes, he said that “we have already delayed to? much and we must move with maximum possible speed to get the best possible results.”

One month after Prime Minister Lucas Papademos formed an interim government to implement reforms to secure loans under a 130 billion-euro ($169 billion) accord with the European Union and IMF, 50 percent of Greeks have a negative view of how the government has performed, an opinion poll found. Twenty-seven percent were positive about the government, according to the survey of 1,000 Greeks by Alco for Kontra Channel television between Dec. 6 and Dec. 12.

Greece’s economy will shrink by about 6 percent or more this year as the external situation facing the country worsens, making it harder for exports, Thomsen said.

Papademos’s 2012 budget, approved on Dec. 7, aims to reduce the fiscal deficit to 5.4 percent of GDP from 9 percent this year. Efforts to trim the shortfall have deepened the recession, now in its fourth year.

--With assistance from Maria Petrakis, Marcus Bensasson, Natalie Weeks and Tom Stoukas in Athens. Editors: Eddie Buckle, Fergal O’Brien.

To contact the reporters on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net; Eleni Chrepa in Athens at echrepa@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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