IMF approves €4.1b for Greece, urges reforms

March 16, 2011 - 0:0
WASHINGTON (Reuters) -The International Monetary Fund on Monday agreed to disburse 4.1 billion euro to Greece under the country's joint IMF/EU rescue program and urged the authorities to push through tough economic reforms. In a statement, the IMF said some ""major reforms"" still needed to be designed and implemented to ""build a critical mass necessary"" to underpin the country's economic recovery. Still, the IMF concluded that Greece had made progress under the program with inflation low, unit labor costs falling and significant budget changes underway. ""Overall, a measure of stabilization has been achieved,"" said John Lipsky, the IMF's first deputy managing director, in the statement. ""Greater emphasis on underlying reforms will be needed during the period ahead,"" he added. Lipsky said legislation was needed to change the system of collective bargaining, hiring rules and the pension system. He said it was important to complete by May the government's medium-term budget strategy. ""Implementation should begin during 2011 to address a projected budget gap,"" he added. ""In parallel, the government should redouble efforts to combat tax evasion and control spending, especially at the local government level,"" Lipsky added. He said the government's decision to scale up the sale of state assets will support Greece's fiscal adjustment and help Greece retire maturing debt.