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Economy

Greece Repacking Public Payrolls, IMF Bad Loan Worries Grow

ATHENS – As critics predicted, Greece's slow recovery from a near decade-long economic and austerity crisis that was speeding before the COVID-19 pandemic also saw governments start refilling public jobs.

The International Monetary Fund, which was one of the country's lenders in three bailouts of 326 billion euros ($397.48 billion) that started in 2010 and ended Aug. 20, 2018, said it was anxious about Greece returning to its old ways.

For decades, governments packed public payrolls with scores of thousands of unneeded hires in return for votes, nearly bankrupting the country and leading to the rescue packages.

The IMF, said Kathimerini, was also concerned about the level of bad loans that banks were still holding after selling off as many as they could to vulture collectors hounding customers, many whom couldn't pay mortgages, loans and credit cards after being repeatedly hit with pay cuts, tax hikes, and slashed pensions.

Despite the massive aid, Greece's massive debt is unsustainable and growing by the second and the country is saddled with decades of repayments although interest rates had been lowered.

The IMF, along with officials from the Troika of the European Union-European Central Bank-European Stability Fund (EU-ECB-ESF) will be monitoring the country's economy and failure to meet fiscal targets could trigger spending cuts as the country is trying to recover from lockdowns caused by the COVID-19 pandemic.

The IMF and the lenders have become more lenient, however, with Greece struggling and receiving 32 billion euros ($39.02 billion) in European Union loans and grants to help bring a recovery, noted Kathimerini, Greece owing the Washington D.C.-based group only 1.8 billion euros .

That was the feedback the Fund offered Finance Ministry officials in their recent contacts, in the context of the scheduled monitoring of the Greek economy. The IMF is now much more lenient toward Greece, not only because it acknowledges past errors in its assessments and because the pandemic has forced it to ease its strict policies, but also due to the major reduction in Greece’s dues to the Fund, down to just 1.8 billion euros ($2.19 billion) now after earlier pre-payments.

The IMF appeared satisfied with the country's reaction to the pandemic that saw the New Democracy government pump 17.5 billion euros ($21.34 billion) into subsidizing workers laid off in 2020 during the pandemic and helping companies.

The next step, it was said, is moving from the support measures to the Next Generation EU for a post-pandemic rebound although the health crisis while being slowly beaten back by a vaccination campaign ramping up.

The newspaper said the IMF officials told the government the recipe could include tax breaks, tax rate cuts and tax deposit reductions along with a hike in the minimum wage the fund during the bailouts wanted cut.

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