AFP
Washington
Greece has received a vote of confidence from international creditors over progress in overhauling its stricken economy — and a fresh injection of cash from the International Monetary Fund.
In Washington, the IMF announced it had released €1.74bn ($2.26bn) in fresh funds after Greece passed a third performance review — part of the terms of the joint IMF-EU bailout.
IMF chief Christine Lagarde praised Greek efforts to meet its commitments.
“The Greek authorities have made commendable progress in reducing fiscal and external imbalances and in restoring competitiveness,” she said.
“The authorities remain committed to make rapid progress on productivity-enhancing structural reforms and on tax and public administration reforms.
“Greece is well under way to complete its ambitious fiscal adjustment plan, and is on track to meet its 2013 fiscal targets,” she added.
Earlier on Friday in Athens, Jeroen Dijsselbloem, head of eurozone finance ministers, told reporters that the group could discuss further debt relief for Greece next year if the government stayed on track with its recovery programme.
“This is a matter to be discussed if necessary in April 2014 under the conditions,” the Eurogroup chief told reporters at a joint press conference with Greek Finance Minister Yannis Stournaras.
The European Financial Stability Facility meanwhile released another aid instalment, worth 7.2bn, to help recapitalise Greece’s stricken banks.
The funding is part of the €173bn, four-year programme to put Athens’s finances on a stable path. The IMF so far has released €6.57bn to Greece under the programme.
Dijsselbloem, the Dutch finance minister, stressed that it was “crucial” for Greece to continue with its structural reforms as he held out hope for a long-awaited exit from a six-year recession.
“We have the first signals of the return of the economy... for economic recovery next year,” he said.
Athens is forecast by the European Commission to manage 0.6% growth in 2014, after contracting sharply by 4.2% this year.
Earlier this week however, the OECD forecast a deeper, 4.8% contraction for 2012, and the recession continuing into 2014, with a 1.2% contraction.
Last year, Greece erased nearly a third of its overall debt through an unprecedented write-down of more than €100bn ($130bn) held by private creditors including banks and pension funds.
Nearly €30bn of additional debt were subsequently recovered in a buyback achieved with bailout funds.
From €355bn or 170% of GDP in 2011, Greece’s debt fell to around €303bn in 2012 or 157% of GDP, according to the Greek statistics agency.
But it could climb to 175.2% of GDP this year according to EU estimates as Greece’s recession-hit economy continues to shrink.
Last year, Athens received a two-year extension to 2016 in order to meet the fiscal targets set by its bailout programme, and get its public deficit below 3% of gross domestic product (GDP).
The EU and IMF have committed a total of 240bn euros in rescue loans to Greece since 2010.
In return for the international aid, which helped stave off bankruptcy, the heavily indebted country has been obliged to pursue austerity measures.
A mission from the so-called troika of creditors — the EU, IMF and the ECB — is returning to Athens on June 4 for a scheduled audit.
They will reportedly discuss a potential need for another €4bn in cuts in 2015 and 2016 to meet deficit reduction targets.
