Greece: IMF hails economic 'progress' but warns on tax evasion

Shipyard workers take part in a protest rally outside Greece's Finance Ministry in Athens Austerity measures continue to spark widespread protests in Greece

Debt-laden Greece has made progress in improving its finances, but the country must do more to fight tax evasion, the International Monetary Fund has said.

In a report, the IMF said Greece had made "exceptional" progress on reducing its budget deficit since 2010.

But the IMF, one of the lenders that backed a bailout of Greece, said the "notorious" problem of tax evasion was still a major issue.

Also, Athens was still too slow to cut public sector jobs, the IMF said.

Cutting the budget deficit and making its economy more competitive were key conditions of the 240bn-euro (£202bn) bailout from the European Union and the IMF.

"Progress on fiscal adjustment has been exceptional by any international comparison," the IMF said in its report, which followed a visit by officials to the country.

"Greece has also made a significant dent in its competitiveness gap," the report said.

But the IMF added that "insufficient" structural reforms have meant that deficit cutting has been achieved primarily through cutting jobs and salaries bringing "unequal distribution of the burden of adjustment".

The IMF also said that "very little" had been done to tackle Greece's "notorious tax evasion," with the rich and self-employed "simply not paying their fair share" as austerity unfairly hits mostly public sector workers earning a salary or a pension.

'Taboo'

The Fund called on the government to strengthen the independence of the tax administration to make it easier to reform the system.

On public sector jobs, the IMF said Greece is too reliant on voluntary departures. "The taboo against mandatory dismissals must be overcome," the report said.

Last month, the Greek parliament adopted a law that will allow the dismissal of 15,000 civil servants.

But under Greece's current bailout plan agreed in November, Athens has to cut 150,000 public sector jobs overall from 2010 to 2015, about a fifth of the total.

Compulsory redundancies are a sensitive issue in Greece where unemployment has hit a record high of 27.2% and the economy is now in its sixth year of recession.

Last week, a European Union report forecast that Greece would end years of recession in 2014 with growth of 0.6%, in line with an earlier forecast by the IMF.

But, following what the IMF forecast will be a 4.6% contraction of the economy this year, the Fund warned that attempts to "artificially" stimulate growth should be resisted.

More on This Story

More Business stories

RSS

Features & Analysis

  • Stained glass of man with swordFrance 1 England 0

    The most important battle you have probably never heard of


  • Golden retriever10 things

    Dogs get jealous, and nine more nuggets from the week's news


  • Pro-Israel demonstrators shout slogans while protesting in Berlin - 25 July 2014Holocaust guilt

    Gaza conflict leaves Germans confused over who to support


  • The emir of Kuwait Sheikh Sabah al-Ahmad al-Jaber al-SabahFreedoms fear

    Growing concern for rights as Kuwait revokes citizenships


Elsewhere on the BBC

  • CastleRoyal real estate

    No longer reserved for kings and queens, some find living in a castle simply divine

Programmes

  • A robot which is due to compete in the 2014 RoboCupClick Watch

    Why robots from 45 countries are playing football in Brazil, plus other technology news

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.