The Fourth Review Mission to Greece was integrated by staff teams from the European Commission, European Central bank (ECB) and International Monetary Fund (IMF). Its main goal was to discuss recent economic developments and policies needed to keep the country’s economic program on track. The mission has reached staff-level agreement with the authorities on a set of economic and financial policies needed to meet program objectives.

Regarding the outlook, the recession in 2010 was slightly more pronounced than what was anticipated. But there have been encouraging signs recently, in particular a notable pick-up in exports. Unit labour costs are set to decline further, supporting the strong export dynamics, and inflation is on a declining trend.

The Mission has concluded that significant progress, in particular in the area of fiscal consolidation, has been achieved during the first year of the adjustment program. However, reinvigoration of fiscal and broader structural reforms is still necessary. With regard to these reforms, in the fiscal area, further sustained deficit reduction will require comprehensive fiscal structural reforms. The government has committed to an ambitious medium-term fiscal strategy that will enable it to maintain its 2011 and medium-term fiscal targets. On the revenue side, the government will reduce tax exemptions, raise property taxation, and step up efforts to fight tax evasion.

The government in Greece is committed to significantly accelerate its privatization program. To this effect it will create a professionally and independently managed privatization agency, and has drawn up a comprehensive list of assets for privatization with the aim of realizing revenues of €50 billion by the end of 2015. In the financial sector, liquidity remains tight, but policies are in place to ensure adequate liquidity provision for the banking system. In addition, the government is putting in place legislation to modernize public administration, reform healthcare, improve the functioning of the labour market, remove barriers to setting up and operating a business and liberalize transportation and energy has already been passed or is underway. It will continue to push ahead in these areas, with a particular emphasis in coming months on growth-drivers such as reviving the tourist industry and removing administrative barriers to exports.

Commissioner Olli Rehn following the conclusion of the Fourth Review Mission to Greece stated that the European Commission and the Member States are ready to reinforce their technical assistance in those economic areas where the authorities may feel the need. Since the beginning of the adjustment programme, Greece has received such technical assistance from the Commission and the IMF in various policy areas relevant to implementation of the programme. He remained that the Commission is open to explore possibilities for further and reinforced assistance should there be a need, for instance in taxation and privatization matters.

Discussions on the financing modalities for Greece’s economic program are expected to take place over the next few weeks in order to build the agreed comprehensive policy package. Once this process is concluded and following approval of the IMF’s Executive Board and the Eurogroup, the next tranche will become available, most likely, in early July.