IMF Says Greece’s Misery Not Over, More Austerity Likely

Breaking with Greece’s European creditors, the International Monetary Fund said the country’s primary surplus in 2018 will be lower than expected and could require triggering more of the brutal austerity measures that have buried people with pay cuts, tax hikes, slashed pensions and worker firings.

The grim news hit Prime Minister Alexis Tsipras’ trumpeting the economy is on the verge of recovery and as Greek officials are in talks with envoys from the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) over terms attached to a third bailout, this one for 86 billion euros ($102.1 billion).

The IMF took part in two first rescue packages totaling 240 billion euros ($284.92 billion) but has stayed out of the third, saying Greece’s debt is unsustainable. Now the Washington, D.C.-based institution said the primary surplus – not including interest on debt, the cost of running cities and towns and state enterprises, social security and some military expenditures – will be 2.2 percent of the Gross Domestic Product (GDP), not 3.5 percent as the ruling Radical Left SYRIZA-led coalition and the Troika estimated.

That means the government – with the bailouts expiring at the end of August, 2018 – could have to make additional cuts of 2.3 billion euros ($2.73 billion) and short-circuit Tsipras’ hopes of convincing Greeks he buried with tough measures he is bringing a recovery, with polls showing he’s running at only about 10 percent support after reneging on his promises.

If the Troika disputes the figures, the IMF could walk away from any more participation. With Tsipras having agreed to automatic cuts in 2019-20 if fiscal goals aren’t met he will be between a rock and a hard place in trying to placate furious Greeks and the lenders.

Government officials dismissed the report and said they knew ahout it all along and that the IMF will be proved wrong and SYRIZA proved right.