IMF mission chief says Greece is at crossroads

Sat Oct 8, 2011 6:36pm EDT
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By Sarah Marsh

BERLIN (Reuters) - Greece is at a crossroads and will need to implement "much stricter structural reforms" than seen so far, IMF mission chief to Greece Poul Thomsen was quoted as saying by a German paper on Saturday.

The gloomy comments suggested the IMF was still unsure whether current talks on a vital aid tranche for Athens would conclude positively, given doubts over Greece's willingness to reform and the impact of Greek strikes and riots.

"Greece is at a crossroads," he was quoted as saying by Welt am Sonntag. "It is clear the programme will not work if the authorities do not take the path that requires much stricter structural reforms than those that we have seen so far."

The IMF on Friday dismissed a statement by the Greek government that the deal on aid was already completed.

"It is going two steps forward, and one backwards," Thomsen said. "The Greek government understands that many of the most difficult changes lie ahead. At the same time, the political and social fatigue is growing."

Athens could run out of cash as soon as mid-November without the new eight billion euro aid installment, increasing the risk of a default that would drag the euro zone deeper into a debt crisis already shaking financial markets worldwide.

Inspectors from the IMF, the European Commission and the European Central Bank -- known as the troika -- resumed last week their review of Greece's progress under a multi-billion euro bailout, after leaving Athens four weeks before over disagreements on how to put its finances back on track.

"The Greeks believe it is enough to make laws," the EU Commission's Matthias Mors told the Welt am Sonntag. "But it takes time to implement. And often the right structures are lacking, for example in tax administration."   Continued...