Greeks fuming as IMF admits mistakes in bail-out deal

Greeks fuming as IMF admits mistakes in bail-out deal

 

By Lefteris Yallouros – Athens

The IMF’s admission that mistakes were made in Greece’s fiscal adjustment program has been met by anger in Greece.

The IMF admitted in a report on the bailout program that it bent its own rules for the program to go ahead and suggested that it would have been better to have agreed a debt reduction plan for Greece back in 2010, rather than letting the issue fester until 2011..

“Market confidence was not restored, the banking system lost 30% of its deposits and the economy encountered a much deeper than expected recession with exceptionally high unemployment”, the report reads.

Prime Minister, Antonis Samaras said Thursday that his government had been saying the troika’s plan was wrong all along.

“If you read through this very recent report, you will probably remember that I was emphasizing, in fact criticizing, what the IMF calls mistakes from the very beginning. We have been correcting those mistakes over the last year,” Mr. Samaras told reporters.

Samaras is harmed by the timing of this report as it puts a dent in his charm offensive and the strategy of advertising the so called “Grecovery” abroad.

Socialist PASOK leader, Evangelos Venizelos said his party had also sounded warning much earlier.

Main opposition SYRIZA and lesser opposition parties are fuming at the IMF report released Tuesday evening, which states that it underestimated the damage done to Greece’s economy from spending cuts and tax hikes imposed in a bailout.

The news was even harder to take as unemployment figures showed Greece’s jobless rate rise to record-highs in March, with the total number of unemployed Greeks hitting 1.3 million.

The IMF hasn’t just angered Greeks, however. The European Commission has disputed that mistakes were made in the handling of Greece’s bailout.

“The report argues that an upfront debt restructuring in 2010 would have been desirable. We fundamentally disagree,” Commission spokesman Simon O’Connor said.

“The report ignores the interconnected nature of the euro area member states. Private debt restructuring would have certainly risked systemic contagion at that stage.

“It would have also severely undermined the program. This was the unanimous position of the member states of the euro area and, indeed, of the Troika partners at the launch of the program,” Mr. O’Connor added.

Analysts now ask if Greece’s vindication that it was handed the wrong remedy to its problems will give the government leverage to request measures are relaxed.