The controversial plan passed by the Greek parliament is not an "austerity" program, the IMF said Wednesday, as protests turned violent in Athens and fire broke out at the Greek finance ministry. "I just want to make one point: this is often portrayed in the press as an 'austerity' program," John Lipsky, the acting managing director of the International Monetary Fund, told reporters.
"The heart of the program that was introduced in the Greek parliament is a structural adjustment program, that is designed to address in a fundamental way the basic problems of the Greek economy, which is a lack of competitiveness." The plan passed by Greek lawmakers is designed to slash 28.4 billion euros ($40 billion) from the balance of government spending by 2015 and prevent a default by the Mediterranean country that could potentially destabilise the wider eurozone.
The cuts could increase hardships for the Greek people in the short term, but the IMF says they are necessary to rebuild the country's finances. The Greek parliament approved the plan under pressure from the European Union and the IMF, enraging protestors who clashed with riot police in the streets of Athens after the vote. The IMF has avoided the word "austerity" in recent years, especially after its response to the Asian financial crisis of the late 1990s left it with a reputation for heartlessness.
The Fund urged Argentina to carry out a tough debt-cutting plan in 2001, but its officials side-stepped any reference to austerity in describing it, with former IMF chief Dominique Strauss-Kahn calling it simply an "economic program." Lipsky is set to lead the Washington-based multilateral organisation until July 5, when France's Christine Lagarde takes up the IMF's top job, replacing Strauss-Kahn, who resigned in May after being arrested for sexual assault.
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