ATHENS (Reuters) – Debt-laden and recession-hit Greecemust accelerate structural reforms and slow down on deficit reduction, the head of the IMF’s inspection team for Greece was quoted as saying on Wednesday.

International Monetary Fund’s (IMF) chief of mission Poul Thomsen addresses the audience during an economic conference in Athens December 14, 2011. Credit: Reuters/Yiorgos Karahalis

Austerity policies imposed on Greece in 2010 in exchange for a 110-billion euro EU/IMF bailout have prompted social unrest, plunging Greece into a deeper-than-expected recession.

A second bailout, currently under discussion, must focus on fast reforms to make the economy more competitive, the IMF’s Poul Thomsen told Greek newspaper Kathimerini.

“We will have to slow down a little as far as fiscal adjustment is concerned and move faster – much faster – with implementing reforms,” he said in remarks published in Greek.

Greece and its international lenders, the EU and the IMF, are only days away from completing talks on the second bailout, which Athens needs urgently to avert a chaotic default next month, Thomsen said.

“Talks about the program will be completed very soon, it is a matter of days,” he said. As part of the reforms, Greece may have to lower its minimum wage and cut holiday bonuses in the private sector, he added.

Thomsen said, however, that before the new deal can be agreed, the IMF needs assurances that Greece’s major parties would stick to its basic outline after elections scheduled for this year.

“We need assurances that whoever is in power after the election and reasonably wishes to make some changes in economic policy will be in line with the targets and the basic framework of the agreement,” he was quoted as saying by the paper.

Thomsen reiterated the IMF’s position that Greece’s public sector creditors may need to participate in a restructuring of its debt, alongside its private sector creditors. He said Greek banks should not be nationalized as part of efforts to recapitalize them. “We don’t want the state to run banks,” he said.

Reporting by Harry Papachristou, Reuters

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