Athens, June 12, 2015/ Independent Balkan News Agency
The IMF team left Brussels, harsh statements by Rice
Review Hari Stefanatos
Negotiations in Brussels reveal big differentiations between the institutions and the Greek side, after the briefing of the International Monetary Fund by its representative Jerry Rice in Washington, since the differences with the Greek government are presented as very big, while the final agreement, according to the IMF, remains a remote prospect.
As it was stressed, large differences remain in key issues of the negotiations, such as insurance, VAT and primary surpluses, as there has been no progress.
Rice answered questions from Katerina Sokou (Daily), Lena Argyri (ERT) and Michalis Ignatiou (Mega, www.mignatiou.com), as well as from correspondents of Reuters and Bloomberg.
According to Jerry Rice, the technical team of the IMF and the head of the Fund for the Greek program, Rishi Goyal, left Brussels and returned to Washington. The reason was that discussions in Brussels are conducted at political level, in which the IMF cannot engage: “We are not a political institution, we are a technical institution, was the precise wording used.
The most worrying part, however, is the unprecedented harsh phraseology he used in general, which refers to the “nervousness” prevailing in the Fund’s ranks, with the representative making specific references to matters, which in the opinion of the institution, require immediate interventions by the Greek side: “There are major differences between us in many areas. No progress has been made to reduce these differences”, he said.
At the same time, he proceeded to a detailed reference to the argument of the Fund for the urgent need of reform interventions in insurance, VAT and ensuring the financing of the Greek program.
The social security system in Greece was called “unsustainable”, as among other things, the subsidy allocated for it equals 10% of the country’s GDP: “The average pension in Greece is the same as in Germany, while the average pensioner in Greece go into retirement six years before the German”, he said and stressed that the IMF’s priority is to protect the weak and low pensions.
As regards with taxation, Rice urgently called for the broadening of the tax base and recalled the Fund’s adherence to tax administration reforms. Greece has the lowest collectability in Europe as regards with VAT, blaming the system’s complexity, demanding its immediate simplification, in order to increase revenues by 1% of the GDP annually.
The funding for the program was linked by Jerry Rice with primary surpluses: “There is a relationship between financial objectives and funding levels”, refraining to comment on the objectives and primary surpluses.
“We are fully aware of how urgent the situation is”, Jerry Rice said, making it clear that the IMF does not leave the negotiations table, reiterating the commitment of the institution to work with the Europeans and the Greek government for a solution, while also stated that there is no timetable for a final solution, indicating meaningfully that the “ball is in Greece’s court”. He estimated that it is a matter of time for new proposals to be given to creditors.
He denied that the IMF is “outraged” by the Europeans and stated that the proposal was tabled a week ago to the Greek authorities was a joint proposal from the three institutions.
On the issue of the repayment of installments that pile up to EUR 1.56 billion at the end of the month from Greece, he merely stated that “the Greek authorities have publicly declared that they will fulfill their obligations”. He added that any additional funding for Greece will be considered only when the negotiations are completed.
He also announced the participation of the General Director of the IMF, Christine Lagarde, to the Eurogroup on June 18, where she will present the report of Article 4 of the Fund for the eurozone.
Jerry Rice did not go to comment on the decision of the Council of State, which ruled pension cuts unconstitutional.