ATHENS — Greece has made progress in raising much needed revenue, impressively overshooting its tax collection targets, but more needs to be done to ensure that money gets to the country’s languishing economy, the head of the European Commission’s task force on Greece said Thursday.
Greek authorities made strides last year in cracking down on tax evasion, collecting 946 million euros ($1.2 billion) in back taxes, more than double the 400 million euro target, the official, Horst Reichenbach, said at a news conference in Athens.
Still, this was a fraction of the potential in Greece, where tax evasion is endemic. “There is about 8 billion euros in collectible revenue,” Reichenbach said.
Reichenbach was presenting the task force’s second quarterly report on progress at carrying out changes demanded by foreign creditors, the European Union and the International Monetary Fund in exchange for two installments of bailout aid. The second installment, of 130 billion euros, was approved by Greece’s European partners in time to keep the country from defaulting this month.
The IMF approved on Thursday the release of 28 billion euros in loans for Greece over the next four years. It said 1.65 billion euros would be available immediately.
In a written statement issued after the announcement of the decision, Christine Lagarde, the fund’s managing director, praised Athens for “its tremendous efforts to implement wide-ranging painful measures over the past two years,” but said more needed to be done. “Greece’s priority is to undertake competitiveness-enhancing structural reforms,” she said, adding however that “significant further fiscal adjustment is necessary to put debt on a sustainable downward trajectory.”
In a conference call from Washington, an IMF official said Greece’s debt-to-GDP ratio was projected to drop to 116.5 percent by 2020 from 165 percent at the end of 2011.
The chief of the IMF’s mission to Greece, Poul M. Thomsen, emphasized the importance of Greece carrying out labor market reforms — moving away from collective labor contracts — to become more competitive. “Greece still faces a major competitiveness gap; if it doesn’t close this gap, it will continue to see a reduction in wages,” he said. Thomsen said he hoped for an increase in tax collection but did not see any scope for further tax increases.
The European Commission’s task force report highlighted two chief concerns: growth and employment. Greece’s unemployment rate of more than 20 percent is one of the highest in Europe, with one in two young Greeks out of a job.