IMF recognizes 'notable failures' in Greek bailout

The International Monetary Fund (IMF) acknowledged that it made ‘notable failures’ in its handling of the Greek bailout, admitting they had underestimated how deeply austerity measures would stint growth.

The IMF was successful in keeping Greece in the eurozone, which
prevented the entire collapse of the euro currency bloc, and have
helped keep the Greek economy afloat by pumping in over 200
billion euros ($258.8 billion).

With Greece in its sixth year of recession, and with an
unemployment rate of 27 percent, in a rare moment of critical
self-reflection, the IMF, has issued a report
asking many ‘what if’ scenarios, retracing their steps in the
Greek bailout.

In the titled ‘Ex-post evaluation’ report released on Wednesday,
the IMF takes a slice of the blame in Greece’s worsening
financial condition, as they grossly underestimated the impact of
austerity measures on its economy.

‘Notable failures’, according to the report, include failure in
restoring market confidence, the banks’ 30 percent loss in
deposits, high unemployment, waiting too long to restructure the
nation’s debt, and a deepening of the recession.

In short, under IMF policies, Greece’s recession
worsened.Image from www.imf.org

The IMF have four main criteria for qualifying bailouts, but
Greece only fulfilled one out of the four.

The report analyzes whether or not granting Greece ‘exceptional
access’ is justified now the country is in a much more severe
recession than the ‘troika’ lenders forecast 3 years ago.

In exchange for economic aid, Greece pledged to massively reduce
their government spending and to reform their economy under IMF
supervision.

Cyprus, Greece, Portugal, and Ireland have all received bail-out
support from IMF lending.

Cyprus has been hit hard with its bailout
arrangement, and is now urging its President to ask the European
Commission that Cyprus be listed as a ‘poorer’ region of the EU,
so they can be eligible for more structural funds. Currently,
they are classified as a ‘rich’ country, based on their economic
condition in 2004 when they entered the EU.

Activists met in Frankfurt on May 31st and staged a protest against European leaders handling
of the three-year euro debt crisis.

They blocked the entrance to the European Central
Bank
, one of the IMF’s ‘troika’ lending partners which gave
Greece bailout funds.

Blockupy activists lay blame for the debt crisis in Europe with
the banks and in particular the ECB for its role in imposing
austerity measures on EU citizens.

Many activists expressed distrust in the IMF, only seeing it as a
power-wielding organization that collects on European debt to
influence its policy.

According to Blockupy, the austerity measures proposed by the
so-called troika, consisting of the ECB, International Monetary
Fund (IMF) and the European Commission have not reduced the
national debt of the European countries. An increase in taxes and
cuts to social programs have actually worsened the situation,
deepening recession and increasing unemployment in the EU
dramatically.

This article originally appeared on: RT