The International Monetary Fund (IMF) said on Wednesday that the Greek economy is beginning to stabilize and the fiscal performance is on track to meet targets, after it concluded a review with EU partners, a precondition for Greece to get new rescue loans.
Staff teams from the IMF, European Commission and European Central Bank (ECB) agreed that the economy is poised for a gradual resumption of growth, and prices are adjusting and inflation remains well below the euro area average, according to a IMF statement.
"We believe that the 2014 fiscal targets will also be met, taking into account the measures being implemented and planned. The authorities reconfirmed their commitment to implement policies needed to achieve the 2015 primary surplus target of 3 percent of GDP," it said.
The staff team of the IMF and EU auditors began their latest round of inspection on the progress of the three-year Greek austerity and reform program last September to decide whether Greece is eligible to get the next 1 billion euro of rescue loans.
"The authorities are making progress on structural reforms to improve the growth potential and flexibility of the Greek economy and help create a fairer and more supportive environment for investment, growth, and job creation," the staff team concluded.
Greece is committed to implementing a very large majority of product market reforms, taking concrete measures to liberalize the transport and rental markets and open up closed professions, according to the statement.
Progress is also being made in reforms of the public administration, which should reduce the burden of red tape and improve the quality of public services to the Greek people.
The Greek authorities are committed to taking all necessary actions to ensure that banks remain healthy and adequately capitalized, but the staff team found there are upside risks to the capital needs estimates, if the authorities and banks do not urgently and efficiently address the high level of non-performing loans.
The staff team warned the Bank of Greece remain vigilant in its oversight of the banking system and proceed forcefully in requiring banks to quickly work out their large stock of problem assets.