Including Greece, Portugal and Ireland, she said the IMF’s involvement in the euro zone crisis programs was a “qualified success”.
Advertisement
“Critically, there was no rigorous attempt to articulate a convincing path to restoring debt sustainability in Greece, other than a program of official financing, fiscal adjustment and structural reforms”, the IMF’s Internal Evaluation Office (IEO) said in its report, obtained by Kathimerini and first published earlier this month. “Coming against the backdrop of the global financial crisis, the risks of broader contagion were high”.
He noted that Egypt’s quota, or shares in the Fund, are about 2.08 billion Special Drawing Rights – the IMF’s unit of account – or about $2.9 billion at current exchange rates.
It claimed the body was too optimistic in setting growth forecasts for some bailed-out nations and, by teaming up with the European Commission and the European Central Bank (ECB) to form the troika, left itself open to accusations of political interference.
Greece has seen the size of its economy shrink by about 30% over the past six years, a much worse performance than the fund anticipated.
It says the handling of the crisis raises issues of transparency and accountability. The IMF was overly optimistic about Greece’s economic prospects, the report said.
“By the time the International Monetary Fund was invited to provide its expertise and financing in late March 2010, the option of debt restructuring at the program’s outset was off the table”.
It went on to argue: “The IMF’s handling of the Eurozone crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently”.
Christine Lagarde, the fund’s managing director, said: “Overall, the conclusion I draw is that the fund’s involvement in the euro area crisis has been a qualified success”.
“On the other hand, Greece undertook enormous adjustment with unprecedented assistance from its worldwide partners. The procedure used for Greece was essentially repeated for Ireland and Portugal”, the report said. “This enabled Greece to remain a member of the euro area – a key goal for Greece and the euro area members”.
The IEO acknowledged that the European crisis was an extraordinary, complex challenge, the first time the Fund dealt with advanced economies in a currency union.
“Greece, however, was unique: while initial economic targets proved overly ambitious, the program was beset by recurrent political crises, pushback from vested interests and severe implementation problems that led to a much deeper-than-expected output contraction”, said Lagarde, who replaced Strauss-Kahn in 2011 after he resigned amid a sexual assault scandal.
Advertisement
Aside from that point, she stressed that the euro area crisis had been “extraordinary” and “unprecedented”.
