According to International Monetary Fund (IMF) officials, IMF chief economist Maurice Obstfeld and European Department Director Poul Thomsen, the financial institution is not demanding more austerities from Greece. The IMF has taken to its blog in order to defend its position saying that “Greece’s debt is highly unsustainable and no amount of structural reforms will make it sustainable again without significant debt relief.”
“The IMF is being criticized for demanding more fiscal austerity, in particular for making this a condition for urgently needed debt relief,” the two officials blogged on their site.
Adding that: “The IMF is not demanding more austerity…We have not changed our view that Greece does not need more austerity at this time. Claiming that it is the IMF who is calling for this turns the truth upside down.”
The IMF says that it warned Greek officials against trying to secure a larger primary surplus than the realistic and achievable 1.5 percent, but that they did not listen and agreed with the European Stability Mechanism (ESM) and its program.
“…Contrary to our advice, the Greek government agreed with the European institutions to temporarily compress spending further if needed to ensure that the surplus would reach 3.5% of GDP…We think that these cuts have already gone too far, but the ESM program assumes even more of them,” Obstfeld and Thomsen wrote defending their position.