Greece has met all of its targets under the austerity plan laid out for it by the European Union and International Monetary Fund, and should receive its next tranche of financial aid as scheduled, the EU, IMF and European Central Bank (ECB) said in a joint statement on Thursday.

The programme is on track. This was a very ambitious programme with a lot of front-loading, and the good news is that it is being implemented as agreed.

However, after an impressive start on its austerity plan, it must now shift to drastic reforms to return to growth, a senior IMF official said on Thursday.

EU, IMF and ECB officials wrapped up on Thursday a two-week visit aimed at checking if Athens had made enough progress to receive a second, 9 billion euro aid payment.

“The programme is on track. This was a very ambitious programme with a lot of front-loading, and the good news is that it is being implemented as agreed,” the IMF’s mission chief for Greece Poul Thomsen said in an interview.

Asked if the 9 billion euro aid instalment, which Greece hopes to get from EU partners and the IMF in September, was secured, Thomsen said: “Yes … I am confident they (the IMF board) will share my assessment that this is a very impressive start on a very impressive programme.”

Analysts have said it would be difficult for Greece to fully meet the target to slash its budget deficit by 5.5 percentage points to 8.1 percent of GDP this year in the face of weak revenues and recession, but Thomsen said he believed this could be achieved.

“In our talks with the Ministry of Finance we have come to the joint conclusion that yes, it’s going to be tight, but we think the targets are going to be met,” he said.

Greece almost halved the central government budget deficit in the first six months of 2010 with drastic spending cuts outweighing weaker-than-expected tax revenues.

But local authorities and hospitals – traditional black holes of Greece’s finances – are likely to keep falling short by the end of the year, making it crucial for the central government budget to keep outperforming, Thomsen said.

“It is, not unexpectedly, proving difficult to control expenditures (for) municipalities, extra-budgetary funds, hospitals, but that’s being offset by overperformance at the state level so the total targets are being met,” he said.

Getting rid of red tape and restrictions on Greece’s 70 or so regulated professions will be key to a return to growth, expected in 2012, and must be a priority for the government, he said.

“The next step is to gradually shift to reforms,” Thomsen said, welcoming the government’s tough stance towards striking truck drivers, whose walkout last week threatened to dry up the country’s fuel supplies during the key tourism season before the government ordered them back to work.

“What this has shown to me is that this government is serious about reform, it is not going to back off just because a special interest group is opposing reforms,” he said.

The Greek Finance Minister was determined in his response to the report.
“The first assesment is totally positive, the next tranche of the loan is secured,” Finance Minister George Papaconstantinou said, during a news conference that was delayed for two hours due to a bomb scare in his ministry.

Authorities evacuated journalists and staff from the building, but no exlposive device was found.

“There is no new memorandum or new (austerity) measures…But there are new challanges,” Papaconstantinou said.