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The International Monetary Fund has finally released its report on the status of the Greek economy, which recognizes that despite the billions poured into the country, its economy deteriorates. Recession in Greece in 2011 is 6%. Greece has been in recession for a third consecutive year now and the reason for this is the choice of the government to reduce wage-price ratio instead of increasing productivity through structural reforms. The International Monetary Fund, which itself proposed in March an ambitious privatization programme for € 50 billion, today admits that in practice, technical problems and unfavourable market conditions have blocked privatization.

The report signed by the Head of the mission of the International Monetary Fund in Greece, Poul Thomsen, emphasizes that structural reforms are not actually implemented, as their approval by Parliament is not followed by practical actions. The Fund provides for elections in the first quarter of 2012 and reports the determination of the three parties, which support the cabinet of Prime Minister Lucas Papademos, to reduce costs in the public sector and to expand the number of people who declare and pay taxes.

The new programme of the International Monetary Fund is built on the assumption that PSI or voluntary cancellation of the Greek debt by private creditors in the country has met the initial expectations. It relies on the assurances of the cabinet of Lucas Papademos that it will carry out the necessary structural reforms, so that unemployment will begin to decline. The programme is very likely to fail due to the deteriorating situation in the eurozone but also due to the inability of Greece to carry out the reforms.

The Greek government failed to implement the planned reforms in the summer and autumn due to public unrest and deteriorating economy. Meanwhile, it was agreed in recent months that private creditors would write off 50% of the total debt. On their part, the eurozone countries will pay Greece an additional € 30 billion to bring its debt down to 120% of GDP by 2020.

At the same time, markets are increasingly looking at Greece with distrust, because of the incomparably more significant involvement of private creditors in the 'voluntary' Greek debt haircut. The Greek spread index and CDS insurance mark new records. In 2011, the country's economy sharply collapsed and the recession was greater than expected. Most affected are retail and manufacturing industries. Unemployment rose sharply to 16.5%.

The International Monetary Fund warns that Greece’s macroeconomics needs further adjustment. Negotiations on the PSI and the deterioration of liquidity might have a negative impact on the business environment. A greater "voluntarily" debt haircut might lead to an even greater need of reducing government spending and drop in incomes.