Little consensus on how to handle Europe's worst economy...
The International Monetary Fund has warned that Greece's debts are unsustainable and on an “explosive” path in its first annual report on the country in four years.
This is despite years of austerity and reforms in the country.
The IMF also took the unusual step of conceding that its board was split over the findings, though most of the 24 agreed with the “thrust” of the appraisal.
Greece has been advised to broaden its tax base and reduce tax rates, while providing more targeted spending on the poor and essential public services.
Its economic growth is only expected to reach 1% due to the constraints of the third financial bailout since 2010 and the problems of an ageing population. The IMF forecasts that government debt will reach 160% of gross domestic product (GDP) by 2030, and would "become explosive thereafter".
Poul Thomsen (AP Photo/Kostas Tsironis)
IMF European department director Poul Thomsen told reporters:
"We are saying that Greece needs to take some fairly difficult decisions to make its budget much more growth-friendly."
The report calls on the European Union to provide "significant debt relief" to it, as it becomes increasingly unwilling to fund further bailouts itself.
Greece's EU creditors have previously ruled out any additional rescue programme until the current one ends next year, with Germany in particular resisting the idea.
Thomsen said that "more of a consensus" is needed on the debt relief, stating:
"If you compare what we were a year ago, there is a narrowing of differences of views on debt sustainability and on what is needed."
Europgroup president Jeroen Dijesselbloem, however, repeated that EU position last night, dismissing the IMF assessment as "a gloomy report" and stating that there would be no Greek debt pardon.
Greece has also hit back at the report, which criticised the proportion of its budget spent on "unaffordably high" pensions and the amount of people exempt from taxation. The IMF said that Greece should work to broaden its tax base and reduce tax rates, while providing more targeted spending to support the poor and other essential public services.
In official responses published alongside the IMF report, Greek finance minister Euclid Tsakalotos argued that the assessment was not based on recent evidence.
Bank of Greece governor Yannis Stournaras also called the report unduly pessimistic and said that it downplayed progress in the financial sector.