MercoPress. South Atlantic News Agency
IMF admits mistakes in Greece, fearing the spill of problems to the rest of Europe
Christine Lagarde admits that there were “notable failures” The International Monetary Fund admitted it had to lower its normal standards for debt sustainability to bail out Greece, and its projections for the Greek economy may have been overly optimistic.
The IMF was one of a trio of international lenders who in 2010 stepped in to keep the Euro zone country from defaulting on its debt and departing the common currency bloc. The IMF pledged about 30 billion Euros to Greece at the time, out of a total package of 110 billion Euros.
Some IMF board members and others criticized the fund for giving Greece so much money in comparison to the size of its economy, accusing the fund of being overly swayed by its European members.
An evaluation released this week said the IMF support was necessary to prevent Greece's problems from spilling over into the rest of the Euro zone and the global economy.
“There was, however, a tension between the need to support Greece and the concern that debt was not sustainable with high probability,” according to the evaluation.
“In response, the exceptional access criterion was amended to lower the bar for debt sustainability in systemic cases.”
After the Greek program was approved, the IMF and the other lenders, the European Commission and the European Central Bank, required Greece to immediately cut some of its debt and implement structural reforms.
But there were “notable failures” in the results, the IMF said. Greece remained in the Euro zone and cut some of its debt, but it failed to restore market confidence and the economy plunged into one of the worst recessions to ever hit an economy in peacetime, with output falling 22 percent from 2008 to 2012.
The evaluation said the IMF assumptions for the Greek economy can “be criticized for being too optimistic.”
“Other lessons drawn concern the need ... for Fund staff to be more sceptical about official data during regular surveillance,” the report said.
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Read all commentsI'll admit I don't know about La Garde's background, but she is starting to seem pretty spineless, irresponsible, and corrupt.
Jun 07th, 2013 - 02:53 am 0Oh come on, what mistakes, they knew what they were doing. It's the same as they done in Argentina 2001 (Argentina was practice area and is the great example for what Europe and the US will face if we all don't stop them, now). Cyprus already got burned (remember, they already took over the people's ...who is next? Spain, the big one Italy and slowly go up north, after Britain, the big price...US. This is the plan folks, wake up, they want your money, because they, IMF (share holders are the mega banks) are broke. Stop with the left vs right, it's fake. The “new trade deals” aren't to create jobs, they are created to strip the people off their workers rights..you get it? to make us poor to go back to the good old days..Feudalism (code word: neo liberalism). Open your eyes.
Jun 07th, 2013 - 05:21 am 01 bushpilot:
Jun 07th, 2013 - 08:09 am 0How so? I defy anyone ( individual or institution ) to come up with a reasonable, workable solution for dealing with Greece. It is an unprecedented nightmare. Even God is scratching his head right now wondering whether he got it wrong about the concept of free will.
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