“It will take many years and additional reforms, which are not currently on the negotiating table, until Greece returns to pre-crisis levels,” said Poul Thomsen, European Affairs Director for the International Monetary Fund, at a press conference in Washington .
Mr. Thomsen reiterated the need for a credible reform package and debt alleviation for Greece in order for the IMF to participate in the program. He made it clear that the IMF can not participate financially if, apart from the reform agreement, the specialization of public debt measures is not completed.
At the same time, he said the primary surplus of 2016 is greater than any forecast and referred to the return of institutions in Athens which is expected next week.
Mr. Thomsen admitted that the Fund had made mistakes in its forecasts over the last year and a half, underestimating Greek fiscal performance. However, he stressed that the issue is the credibility of Greek fiscal targets in the future, while insisting that further reforms are needed in the Greek public sector, pension and tax.
He also noted that the proposal to repay IMF loans to Greece with money from ESM would boost the viability of Greek debt, but as he explained, this is something that needs to be discussed.
Mr. Thomsen expressed the view that Greece would face a liquidity problem to repay the July installments in case the evaluation was not completed in good time and stressed that the whole process is characterized by urgency.
He revealed that the Fund now estimates that Greece can achieve a primary surplus of 3.5% of GDP in 2018 or at the latest in 2019, but a crucial issue, according to Mr. Thomsen, is to determine the time period during which the Country should have a primary surplus of 3.5% of GDP.