December 22, 2015, 00:07 / Economics

Greece refuses IMF services

Europe can monitor the third aid program on its own, the government of the country, Lina Byshok, believes Greek Prime Minister Alexis Tsipras / Thanassis Stavrakis / AP

Greek Prime Minister Alexis Tsipras does not want the IMF to participate in the country's third bailout program, he said in an interview with the FT. The fund's position on budgetary and financial issues is unconstructive, he believes, the eurozone alone can monitor the implementation of economic reforms.

After six years of crisis, European institutions have accumulated the experience to deal with emergencies and are able to independently resolve their internal issues, Tsipras said. His statements should cause a negative reaction from Germany, since it insisted on the participation of the IMF in helping Greece, writes FT. Tsipras' statement could worsen relations with the IMF, which is an active supporter of aid to Greece.

The third aid program for Greece was approved in August and is designed for three years. The country should receive 86 billion euros from the eurozone stabilization fund and the IMF (the fund’s contribution is 16 billion).

The IMF suspended further lending to Greece over the summer due to concerns about the country's huge public debt - about 190% of GDP next year. Tsipras hopes for an improvement in the situation and strives for speedy liberation from the influence of international creditors, writes FT.

Lenders set the following conditions: the primary budget deficit of Greece in 2015 is no more than 0.25% of GDP, in 2016 the surplus is 0.5%, in 2017 – 1.75%, in 2018 – 3.5 %. Also, to receive new loans, Greece must carry out a number of tough reforms, said IMF representative Gerry Rice. This is reform of the pension system, labor legislation and taxation of farmers. So far, Greece has resisted IMF demands to cut pensions, arguing that it can reduce public pension fund deficits by limiting early retirement or otherwise cutting costs.

IMF officials are skeptical about Greece's 2016 budget revenue forecasts. They are also concerned that the 2015 budget proposal of zero GDP growth may be too optimistic due to the unexpectedly strong fall in output in the third quarter, the FT notes.