Greek budget proposals insufficient

The budget reforms that Greece has proposed to its international creditors are not enough to ensure a surplus this year, the International Monetary Fund's chief economist Olivier Blanchard told French financial newspaper Les Echos on Monday.

Greece's radical-left government has been locked in tortuous negotiations with its creditors -- the IMF, the European Union and the European Central Bank -- for the past four months in a bid to unlock 7.2 billion euros ($7.9 billion) in bailout cash.

Greece was supposed to have a three percent budget surplus this year, but that now looks out of reach, Blanchard said.

"Given the latest estimations show a substantial budget deficit for the time being, credible measures are needed to transform this into a surplus and maintain a surplus in the future," he said.

"Seeing what has been put forward so far, we are still quite far off."

The IMF "is flexible on what Athens needs to do, providing a coherent programme is presented in the end", Blanchard was quoted as saying in an interview on the paper's website.

He said he believed Greece still had structural problems, saying "the pensions system is often too generous and there are still too many civil servants".

"There is a need to look at what structural measures are essential to guarantee sustained medium-term growth."

Blanchard, a Frenchman, said if Greece failed to find a solution with its creditors, then several scenarios were possible, including an exit from the euro, but "everyone hopes to avoid them".

A government spokesman said Monday that Greece will keep on repaying its international creditors for as long as it can, with some 300 million euros due next week and no deal yet in sight.

"To the extent that we are able to pay, we will keep on repaying these obligations," spokesman Gabriel Sakellaridis said.

He said that Greece and its creditors were still seeking common ground on the key issues of tax, social insurance, labour rights and the size of its budget surplus.
Source: AFP