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Posted on: April 23rd, 2012 by Arif Mansour No Comments

IMF warning on Greek euro exit


photo: IMF

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Exiting the euro would entail a dramatic decline in Greece’s gross domestic product, a fearsome increase in prices and a temporary improvement in the country’s competitiveness that would quickly evaporate, a report by the International Monetary Fund warned, according to Kathimerini.

The IMF analysis points out that a return to the drachma would signal a sudden change to the live of the people in Greece.

By contrast, the report suggests Greece will have better results through a gradual fiscal adjustment if it stays in the eurozone. The IMF report also forecasts that such astate of affairs would also lead other countries out of the eurozone causing a serious blow to the bloc’s banking system.

According to an official transcript, Poul Thomsen, head of the Internatinal Monetary Fund during a seminary session at the IMF argued: “the pace of structural reforms that we have seen, you know, certainly during 2011, is not consistent with success. It will lead to failure. So there is need for a significant reinvigoration of structural reform. There is obviously some concern among investors whether Greece can deliver that. “

Poul Thomsen, will visit the country on his own after the May 6 election before a mission visit takes place the following month, according to Sunday’s Kathimerini.

“We need assurances that whoever is in power after the election and reasonably wishes to make some changes in economic policy will be in line with the targets and the basic framework of the agreement,” Thomsen was quoted as saying in an interview with Kathimerini.

Troika inspectors, are expected to visit Athens in June, a month after the elections, to check on progress in meeting fiscal targets preparing plans for budget cuts of nearly 11 billion euros for the following two years.



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