Category: IMF

Greek Economic Reform Pledges to Europe

Greece’s government has pledged reform to try and satisfy the demands of creditors in Europe while maintaining its pre-election pledges.

Below are some of the main points from Greece’s list of reforms – contained in a letter from the Greek government to its European partners – alongside analysis and comment from BBC economics correspondent Andrew Walker.

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Fiscal structural policies

Greece's main port at Piraeus
Many of Greece’s assets – such as the port at Piraeus – have been earmarked for privatisation

Tax policies

  • Broaden the definition of tax fraud and evasion, making it harder to avoid taxes
  • Improve the collection of VAT, fighting evasion using technology
  • Create “a new culture of tax compliance” to make sure that all sections of society – particularly the wealthy – “contribute fairly to the financing of public policies”
  • Work with European and international partners to establish a database that helps tax authorities assess the veracity of previous income tax returns

Andrew Walker: Improving tax collection has been a persistent theme in the discussions between Greece and its bailout lenders. It’s an area where it’s easy to see a shared view between the two sides. The idea of getting the well-off to contribute to the financing of public policies is right in line with Syriza’s wider agenda. Anything that brings in more revenue and so helps stabilise the government finances is likely to be welcome to the lenders as well. Creating a new culture of tax compliance is a bit “motherhood and apple pie”. Who could object? But it will take a long time to achieve.

Public spending

  • Work towards improving the efficiency of central and local government departments
  • Identify cost-saving measures through a thorough spending review of every ministry, reorganising non-salary and non-pension expenditures which account for “an astounding 56% of total public expenditure”
  • Use cross-checking to validate benefits to “help identify non-eligible beneficiaries”
  • Control health expenditure and improve medical services, while granting universal access to healthcare

Andrew Walker: The lenders are also likely to welcome the commitment to review every area of government spending and to identify cost savings.

Pensioners at a rally in Athens, December 2014
Pensioners have been among those hardest-hit by the crisis

Social security

  • Take measures to continue modernising the pension system, reducing the social and political pressure for early retirement

Public administration and corruption

  • Make the fight against corruption a national priority
  • Target the smuggling of fuel and tobacco products, and tackle money laundering
  • Activate legislation to ensure that media outlets pay market prices for the broadcast frequencies they use

Andrew Walker: There is more motherhood and apple pie on tackling corruption, smuggling and money laundering. The aim is not controversial. But will they be able to achieve significant improvements?

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Financial Stability Instalment schemes

  • Improve enforcement methods for collecting unpaid taxes
  • De-criminalise lower income debtors with small liabilities

Banking and non-performing loans

  • Collaborate with banks to avoid auctions of the main residence of households that are below a certain income threshold, while “punishing strategic defaulters”
  • Take measures to support the most vulnerable households, and modernise bankruptcy laws
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Policies to promote growth

A man plays music in front of a sign saying IMF Go Home, Athens, 24 Feb 2015

Privatisation and public asset management

  • Commit not to roll back privatisations that have been completed, and to respect tender processes that have already been launched
  • Review privatisations that have not yet been launched with a view to maximising the state’s long-term benefits

Andrew Walker: The line on privatisation is striking – accept those that have been completed and respect those that are underway. New cases are not ruled out, far from it. The letter only calls for an emphasis on maximising public revenue – which is after all one of the reasons there is a privatisation programme in the first place. How will this go down with Syriza, especially the left of the party? Even so the IMF Managing Director Christine Lagarde isn’t impressed on this point. Privatisation is one of a number of areas where she notes “a lack of unequivocal undertakings to continue already agreed policies”.

Labour market reforms

  • Phase in “a new ‘smart’ approach to collective wage bargaining that balances the need for flexibility with fairness”
  • Over time, to raise the minimum wage in a manner that safeguards competitiveness and employment prospects

Andrew Walker: Also on that list is labour market reforms, another area that Ms Lagarde of the IMF regards critical for Greece. Even so, the party is likely to be suspicious at best of some of the labour market stuff that is included. Linking the minimum wage with productivity and competitiveness could well limit the scope for raising it, which was a central element in the party’s election offer.

Statistics

  • Maintain the institutional independence of Greece’s statistical agency, ensuring that it has adequate resources and that its next president is chosen in a transparent manner

Andrew Walker: The independence of the statistical authority might play into the debt debate later. One idea has been to use growth-linked debt payments. That has more chance of getting off the ground if the growth data come from a genuinely independent and adequately resourced agency.

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Humanitarian crisis

Greeks queue for free onions, 25 January 2012
Many in Greece have seen a lack of cash leave them dependent on handouts (file pic)
  • Address needs arising from the recent rise in absolute poverty though measures such as food stamps
  • Evaluate a pilot minimum income scheme, with a view to extending it nationwide
  • Ensure that the fight against the humanitarian crisis does not have a negative effect on the finances

Andrew Walker: The humanitarian crisis had to be in there in some form. It was so central to Syriza’s political campaign. But the commitment to use non-pecuniary measures and to ensure the fight has no negative fiscal effect shows how hemmed in the Greek government is. It will be hard to land many blows with such constraints on how they can fight.

BBC- February 24th, 2015

 

Strauss-Kahn, Former I.M.F. Chief, Goes on Trial in Sex Case

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PARIS — Dominique Strauss-Kahn, the former head of the International Monetary Fund, went on trial Monday on accusations that he participated in a prostitution ring that extended from the north of France to Brussels, Washington and New York.

In a case that has riveted France, Mr. Strauss-Kahn, 65, who was once seen as a presidential contender, stands accused in Lille, France, with 13 other defendants, including Dominique Alderweireld, a sex-club owner known as Dodo la Saumure.

Mr. Strauss-Kahn is charged with “aggravated procurement in a group,” or pimping, and using his subordinates to obtain prostitutes for lavish sex parties.

In addition to shining a spotlight on a clandestine world of Champagne-fueled sex parties that prosecutors say were attended by lawyers, judges, police officials, journalists and musicians, the case is also spurring debate about sexual morality in France and the extent to which the private lives of public figures should remain private.

In France, having sex with prostitutes is not illegal, but soliciting and pimping are.

Dominique Strauss-Kahn, in a 2011 photo. François Guillot/Agence France-Presse — Getty Images

Mr. Strauss-Kahn has acknowledged being present at sex parties but has vehemently denied the charges, saying he was not aware that some of the women present were prostitutes.

His defenders say that the prosecution is seeking to criminalize sexual ardor, and that Mr. Strauss-Kahn is the victim of a puritanical, politically motivated witch hunt. Moreover, they argue that the sex parties reflect a long tradition of libertinage, and that consensual sex between multiple partners behind closed doors is a matter of private taste and morals.

Mr. Strauss-Kahn resigned as head of the International Monetary Fund in 2011 after he was accused of sexually assaulting a housekeeper at a hotel in New York. The charges were later dropped. He has since been seeking to rehabilitate himself, working as a consultant, lecturing and advising foreign countries as well as large companies in Russia, Africa and Latin America, among other places.

Prosecutors say exclusive orgies were organized in major world cities by businessmen who were seeking favor with Mr. Strauss-Kahn, and that their money was used to finance prostitutes, including for Mr. Strauss-Kahn, who sometimes sought out sex with several partners in one evening.

Mr. Strauss-Kahn’s name first appeared in the Lille inquiry by chance, in May 2011. French investigators had wiretapped the phone of Mr. Alderweireld.

If convicted, Mr. Strauss-Kahn could face up to 10 years in prison and fines of more than 1.5 million euros, or $1.7 million.

Didier Specq, a veteran court reporter who has written a book about the case, said that while the trial was a blow to Mr. Strauss-Kahn, he could emerge emboldened if found innocent.

Mr. Specq said Mr. Strauss-Kahn was still popular among some French people who considered the sexual choices of their politicians to be a private matter.

“Morally, he will take a hit,” Mr. Specq said. “But after a few weeks of this trial, people will realize that the evidence against him is thin. It will raise questions as to whether the case was politically motivated.”

But others said the trial would have a more damaging effect.

Michel Taubmann, a biographer of Mr. Strauss-Kahn, told BFMTV that Mr. Strauss-Kahn had lost his status and connections and was now a man “alone.”

http://www.nytimes.com/2015/02/03/world/europe/prostitution-trial-begins-for-dominique-strauss-kahn.html?module=ArrowsNav&contentCollection=Europe&action=keypress&region=FixedLeft&pgtype=article

Continue reading Strauss-Kahn, Former I.M.F. Chief, Goes on Trial in Sex Case

Has the IMF annexed Ukraine?

Michael Hudson, an economist at the University of Missouri-Kansas City and author of the upcoming book “Killing the Host: Financial Parasites and Wall Street’s War on Capitalism,” says the terms attached to the loans made by the IMF to Ukraine are likely to turn its people into penniless serfs of international banks.

In the video above, Sharmini Peries at The Real News Network asks Hudson, “In a recent interview [by former State Department official James Carden] published in The National Interest magazine you said that most media covers Russia as if it is the greatest threat to Ukraine. History suggests that the IMF may be far more dangerous. What did you mean by that?” Continue reading Has the IMF annexed Ukraine?