News Column

Greece Welcomes IMF Report on Bailout Mistakes

June 6, 2013
Euro Bailout

The European Union on Thursday distanced itself from comments made by the International Monetary Fund (IMF) that there had been "notable failures" in the Greek bailout.

The European Commission "fundamentally" disagrees with several of the findings published by the IMF, including that Greece's debt should have been restructured early on and that too little was done to identify growth-enhancing reforms, spokesman Simon O'Connor said.

"This is plainly wrong and unfounded," he said in Brussels. "In fact, the commission has been a major driving force behind the strong focus of the (bailout) programme on structural reforms."

The European Union's executive works with the IMF and the European Central Bank to monitor and help enforce eurozone bailouts as part of the often-reviled troika.

"I would not jump to any sort of conclusions as to whether there should be any changes to the way that we work together on the basis of this study," O'Connor said.

He downplayed the IMF report as a staff document that has not been approved by the executive board of the Washington-based institution. The commission will now conduct its own review of the cooperation with troika partners, O'Connor said.

Greece "has been a learning process," he said. "Of course we can go back and assess what in an ideal world might have been done differently, but the circumstances were what they were and I think [the commission and its partners] did their very best in what was an unprecedented situation, an extremely difficult one."

O'Connor noted that Greece in the end managed to stay in the eurozone despite intense speculation to the contrary, and that "today the reform programme is on track and there are growing signs of stabilization and increasing confidence in Greece."

Finance Minister Giannis Stournaras had earlier welcomed the IMF report, describing it as "objective," according to the daily Kathimerini newspaper.

The report "will allow the chance to recognize the errors which have been made so that they are not repeated," he said.

The IMF admitted that it had underestimated how much the austerity mandated of Greece as part of its international bailouts - the first of which was agreed in May 2010 - would push the economy deeper into recession.

"The fiscal targets became even more ambitious once the downturn exceeded expectations," the report said, adding that it could not have slowed the pace of belt-tightening reforms.

Athens has so far received about 200 billion euros (262 billion dollars) in loans from a rescue programme totaling 240 billion euros.

Repeated austerity measures, which include harsh salary and pension cuts as well as tax hikes, have helped reduce the country's budget deficit, but at the same time left it deeper in recession than what the IMF and its European partners had initially forecast. Unemployment has surged to more than 27 per cent.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH. Distributed by MCT Information Services

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