IMF mission chief says Greece is at crossroads: paper


By Sarah Marsh

BERLIN (Reuters) - Greece is at a crossroads and will need to implement "much stricter structural reforms" to avoid default, IMF mission chief to Greece Poul Thomsen was cited as saying by a German paper on Saturday.

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The gloomy comments suggested it was still unsure whether current talks on a vital aid tranche for Athens would conclude positively, given doubts over its willingness to reform and Greek strikes and riots.

"Greece is at a crossroads," he was cited as saying by Welt am Sonntag. "It is clear the program will not work if the authorities do not take the path that requires much stricter structural reforms than those that we have seen so far."

The IMF on Friday dismissed a statement by the Greek government that the deal on aid was already completed.

Athens could run out of cash as soon as mid-November without the new eight billion euro aid installment, increasing the risk of a default that would drag the euro zone deeper into a debt crisis already shaking financial markets worldwide.

Inspectors from the IMF, the European Commission and the European Central Bank -- known as the troika -- resumed last week their review of Greece's progress under a multi-billion euro bailout, after leaving Athens four weeks before over disagreements on how to put its finances back on track.

"The Greeks believe it is enough to make laws," the EU Commission's Matthias Mors told the Welt am Sonntag. "But it takes time to implement. And often the right structures are lacking, for example in tax administration."

A senior troika official told Reuters on Wednesday that the inspectors were likely to give the green light to the aid but that it was not assured.

The EU and IMF first want to receive more details on the implementation and impact of plans announced last month to slash the public sector workforce and increase taxes to plug a bigger-than-targeted fiscal gap, the official said.

Athens shocked financial markets by announcing that it would miss 2011 deficit targets set as conditions of a bailout aimed at staving off bankruptcy, despite a series of tax hikes and spending cuts.

Thomsen said he had never seen riots against austerity measures as intense as in Greece.

"People express their frustration sometimes in very unpleasant ways," he said. "That is one of the ugly aspects of my work. And the intensity of it here is new for me."

(Editing by Alison Birrane)

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