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Greece: Update on Greece’s Economic Reform

(Feb. 25, 2011) On February 11, 2011, members of the European Commission, the European Central Bank, and the International Monetary Fund (IMF), or the “troika,” as the three bodies are often called, concluded a two-week visit to Athens to conduct their third review of the Greek government's economic program. To assist Greece in recovering from its economic chaos and instability, the Euro Members have promised support amounting to €80 billion (about US$110 billion). For its part, the IMF has offered €30 billion in a “Stand-by Arrangement,” the IMF's lending instrument offered to countries in crisis. (Factsheet: IMF Stand–by Arrangement, IMF website (Oct. 5, 2010), Approval of Greece's economic progress will trigger the disbursement of additional €10.9 billion by the Euro Members and €4.1 billion by the IMF.

The general assessment of the “troika” is that Greece has made progress towards its objectives; however, it was noted that major reforms still need to be undertaken to secure fiscal sustainability and economic recovery. The troika noted that the recession recovery? is close to the level that was anticipated, while inflation has remained at low levels, and recently there has been a surge in exports. (Press Release, No. 11/37, Statement by the EC, ECB and IMF on the Third Review Mission to Greece, EUROPA (Feb. 24, 2011),

Some highlights of Greece's progress are:

· In the fiscal area, the deficit was reduced to about 9.5% of GDP. The Greek government is planning a number of additional reforms in the areas of taxation, health, and public employment, amidst growing discontent among its citizens and protests that have become a regular phenomenon.

· Concerning financing, Greece is trying to return slowly but steadily to using bond markers at affordable interest rates.

· In the financial sector, tight liquidity and rising numbers of non-performing loans are a strain on the banking system, but private banks have been able to raise capital recently.

· Structural reforms are advancing satisfactorily. Greece has introduced or is in the process of introducing legislation on the labor market, to effect liberalization of closed professions, such as pharmacists, notaries public, and others, despite strong resistance from the affected parties. (Id.)

Greece is due for its next review by these three bodies in May 2011. (Id.)