Greek economic recovery fragile: IMF

Greek and European Union flags flutters in front of the Acropolis in Athens on November 5, 2013 AFP/Louisa Gouliamaki

ATHENS: The economic recovery touted by Greece's embattled government is "fragile", the nation's IMF auditor said on Sunday as he called for new, targeted cuts in the next two years.

"The recovery (in Greece) is fragile and will be hurt if the government does not stay the course of fiscal adjustment and structural reform," Poul Thomsen, the IMF's point man in the creditor mission to Greece, told the Kathimerini daily.

"More measures will be needed in 2014-2016," he added, whilst noting that "horizontal" cuts should be avoided in a country now gripped in a six-year recession.

"The measures should focus on sectors where there is still excessive spending, and be carefully targeted so as to protect vulnerable social groups," he said.

Thomsen said results were "mixed" on long-delayed structural reforms and expressed amazement that civil service layoffs were still "a taboo of sorts" when youth unemployment stands at around 60 per cent.

The interview was published a day after German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras said they saw "light at the end of the tunnel" for Greece thanks to painful reforms.

Greece unveiled a budget this week in which it said the deep recession in the economy would end next year with 0.6 percent growth, following a 4.0-per cent contraction in 2013.

However, auditors from the International Monetary Fund, the European Central Bank and the European Commission concluded their latest visit to Greece to review progress on the country's economic programme without reaching a full agreement, according to an IMF statement.

Such audits determine whether or not Greece receives the next instalment of rescue funding, with the troika of creditors now expected to return to Athens in early December.

The troika predicts a 2014 fiscal gap will exceed 1.5 billion euros ($2.0 billion), while the Greek government estimates the sum to be slightly more than 500 million euros.