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IMF’s Thomsen admits Greece forecast based on insufficient data

For one more time, the International Monetary Fund had to admit that its methods for projections and forecast were questionable. In an effort to reject criticism coming from Greece’s European lenders, the director of the IMF European Program, Poul Thomsen, admitted that the Fund did not had all available and necessary data at hand.

Thomsen admitted the Fund’s questionable methods in a statement he issued to reply to criticism by Valdis Dombrovskis, vice president of the European Commission, and Eurogroup head, Jeroen Dijsselbloem, that the IMF’s latest report was “outdated.”

In an interview with German economic newspaper Handelsblatt, Drombovskis said Greece’s reform program was going according to plan and called on creditors to release fresh funds to Athens.

In line with the recent criticism of Eurogroup head, Jeroen Dijsselbloem, Dombrovskis criticized the International Monetary Fund’s projections for Greece as overly pessimistic.

He stressed that Greece’s reform program was going according to plan. Athens had done “almost everything” to complete the second review of its third bailout program.

The European Union expects economic growth of 2.7 percent in Greece this year and a primary budget surplus of 1.75 percent. By 2018, the budget surplus could rise to 3.5 percent, he said.

The IMF has refused so far to participate in another rescue program for Greece unless European leaders relax their demands on the primary surplus and consider debt relief.

Poul Thomsen, director of the the IMF’s European department, rejected the Dombrovskis’ and Dijsselbloem’s charges.

In a statement to Handelsblatt, Thomsen noted: “The accusation that we have outdated models and have persistently been too pessimistic is at odds with the fact that the Greek program has been missing targets for many years. If anything, we have time and again been too optimistic about growth and fiscal surpluses, mainly because reforms have not been implemented as expected.”

For the time being the IMF remains in its assessments, however Thomsen admitted that they had not all data for the year 2016.

“When we have all data for 2016, we will look at them and, if necessary, change our forecast, if the data prove that we were too pessimistic,” Poul Thomsen stressed in the statement.

Until -and if at all – the IMF manages to get the whole Greek picture, my crystal ball sees no quick agreement among EU lenders, the IMF and Greece.

But this is always the problem with statistics and data. They are always “outdated” as the world moves faster that fact sheets.

That’s me training in lenders’ somersaults. I have problems with positions 4 and 5.

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  1. “By 2018, the budget surplus could rise to 3.5 percent, he said.”

    Which country in Europe has a budget surplus of 3.5?

    Hint to IMF: check the Eurostat statistics.
    In 2015 there were only four (!) countries with a surplus:

    Germany 0,7%
    Estonia 0,1%
    Luxemburg 1,6%
    Sweden 0,2%

    The other countries had a deficit.
    Euro area (19 countries) -2,1%
    EU (28 countries) -2,4%

    What does that mean?