IMF board divided over assessment of Greece's fiscal performance and debt sustainability

The International Monetary Fund (IMF) in an Article IV Consultation report released on Monday said that Greece's economy is set to expand just below 1 percent in the long term and the government could attain the primary fiscal surplus target of around 1.5 percent of GDP.

The report showed that the IMF board was divided over assessment of Greece's fiscal performance and debt sustainability. "Most Directors agreed that Greece does not require further fiscal consolidation at this time, given the impressive adjustment to date which is expected to bring the medium-term primary fiscal surplus to around 1.5 percent of GDP, while some Directors favored a surplus of 3.5 percent of GDP by 2018," the report said.

The following are the projections for Greece in IMF's latest report:

- Greece's growth estimated to be 0.4 percent in 2016, which is seen improving to 2.7 percent this year.

- The country's high unemployment rate is projected to ease to 21.3 percent from an estimated 23.2 percent last year.

- Public debt is expected to drop to 180.8 percent of GDP this year from 183.9 percent in 2016.

Further financial assistance to Greece is dependent on the successful completion of a review of its bailout program and the participation of the International Monetary Fund (IMF). Greece needs a new tranche of financial aid under its 86 billion euro bailout by Q3 2017 to avoid the risk of defaulting on its debts.

The latest IMF report said most directors considered that Greece may need further relief to restore debt sustainability. However, they also pointed out that debt relief needs to be complemented with strong policy implementation to restore growth and sustainability.