Greek fiscal system 'broken': acting IMF head

21st June 2011, Comments 0 comments

Greece's plight is not due to debt levels but because of a lack of competitiveness, its economic "isolation" in the eurozone and a "broken" fiscal system, the acting head of the IMF said Tuesday.

"The critical question regarding the Greek economy is competitiveness, and what it has resulted in is an extremely poor performance," John Lipsky said in Berlin after talks with German Chancellor Angela Merkel on the Greek debt crisis.

"The underlying fiscal system is broken. But that means it can be fixed," Lipsky said at the American Academy in the German capital. "It's not that hard to fix it. It is a matter of political will."

He also said that the Greek economy had failed to benefit from the creation of the single currency zone and was in fact "isolated" in the 17-nation area.

"They have theoretically been in the single market, but in practice they have been left out. Their percentage of exports to GDP (gross domestic output) is the lowest in the euro area," he said.

"The government has expressed its desire, under difficult circumstances, to adopt an extremely ambitious programme of structural reform ... We think that if it is implemented properly it has a reasonable chance of success."

© 2011 AFP

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