Dutch acting Finance Minister Jan Kees de Jager said Greece needs immediate fiscal changes, three days after International Monetary Fund chief Christine Lagarde said the nation should get two more years to meet its targets.
“What we expect Greece to do is implement the economic reforms without further delay,” De Jager said in an interview yesterday with Bloomberg Television in Tokyo, where he attended the International Monetary Fund meetings. “Yes, they are painful but it’s really important that they’re doing them.”
Greece and its international inspectors are racing to find agreement on economic policies ahead of the Oct. 18 summit of European Union leaders. Prime Minister Antonis Samaras is seeking to spread pension and wage cuts over four rather than two years to meet deficit-cutting targets and smooth the impact on an economy set to shrink for a sixth year in 2013.
Lagarde, the IMF managing director, said on Oct. 11 Greece should get two more years to meet fiscal targets and suggested debt reductions are needed before a 130 billion-euro ($168 billion) bailout can be approved. Extending the amount of time Greece has to meet reform targets means European donor states would have to provide more funding, European Central Bank Executive Board member Joerg Asmussen said Oct. 12.
“When they will do all these measures, more money isn’t needed,” De Jager said. “More money because of a delay in the measures, the economic reforms, is a perverse incentive for Greece because we need them, in all our interest, to do as early as possible all the economic reforms.”
While there is “still room for improvement on the structural reform side in Greece,” Spain is already “implementing a lot of economic reforms, a lot of austerity measures,” De Jager said. That’s why a bailout “is not a question for Spain at the moment,” he said.
Standard & Poor’s cut Spain’s debt rating to one level above junk last week despite the government’s announcement of a fifth austerity package in less than a year and also the publication of details of stress tests of its banks. Creditworthiness concerns have grown since the government requested as much as 100 billion euros in European Union aid in June to shore up its lenders and amid signals that the deficit target is in jeopardy.
“Spain is doing a lot of work,” De Jager said. “It will take some time for the positive effects. We have to wait for a few moments to see the positive effects come into place but they will be there.”