Lagarde asks for further layoffs in the Greek public sector

After the discussion on the Greek program at the IMF board meeting, the IMF director made reference to the progress of the Greek authorities to reduce fiscal and external imbalances, but noted that the institutional and structural reforms have not kept pace with the problems faced by the country.

"The greater efforts in reforms remain the key to economic recovery and sustainable development. Deeper reforms in the public sector are vital to complete the necessary fiscal adjustment and proceed with the program under broad public support," Lagarde said.

She added that progress in the modernization of the tax administration is still lower and more should be done to strengthen its autonomy and operational effectiveness.

The IMF chief said that given the slow progress in public administration reform, Greece’s efforts should be focused on ensuring the exit of non-trained personnel from the public sector and the recruitment of new staff with appropriate qualifications.

"Structural reforms must be stepped up to boost productivity and growth. Urgent measures must be taken to address concerns about the structure and governance of the privatization program," she added.

She also said that after the recapitalization of banks financial stability has been ensured, but the key challenges include the cleaning of balance sheets, ensuring strong governance structures and rapid privatization of financial institutions.

Regarding the Greek State debt Lagarde said it is expected to remain at high levels over the next decade. "The assurances from Greece’s European partners that they will consider further measures to support the country if need be, to reduce its debt significantly below 110% of GDP by 2022, which depends on the full implementation from the Greek side of all conditions contained in the program, is welcome."