EU 'fundamentally disagrees' with IMF critique of Greek bailout

AFP, Thursday 6 Jun 2013

The European Commission says it disagrees with the IMF's assessment of the failure of the Greece debt bailout plan as set out in a report that admits to mistakes and criticises Greek and European partners

The European Commission said Thursday it disagrees with key findings of a critical International Monetary Fund report on Greece's first debt bailout in 2010, calling some areas of the report "plainly wrong."
"We fundamentally disagree" with the IMF's view, that Greece's massive debt burden should have been restructured at the outset, instead of waiting until 2012, a Commission spokesman said.
At the same time, the IMF's criticism of efforts to radically reform the Greek economy so as to put in on a path back to growth were "plainly wrong and unfounded," spokesman Simon O'Connor said.
The IMF helped bailout Greece in a 'troika' with the European Union and the European Central Bank (ECB) in 2010 and then when that programme failed, and again in 2012.
The second rescue, besides much increased aid in exchange for a stinging austerity package, also obliged private sector creditors to take huge losses as Greece's debt burden was slashed by more than a 100 billion Euros.
The IMF report admitted to significant failures in 2010 but also put much of the blame on its Greek and European partners, saying they were unprepared for the crisis and the harsh choices — including a deep debt restructuring — that may have made the first bailout work better.
The IMF said it overestimated both Greece's debt sustainability and Athens' ability to implement structural reforms while there were coordination problems with Brussels and the ECB on the 110 billion Euro ($144 billion) bailout.
The Commission was also more focused on European issues than the Greek situation alone, it said.
"The Fund's programme experience and ability to move rapidly in formulating policy recommendations were skills that the European institutions lacked," it added.
O'Connor said, in what he described as a "very preliminary reaction," that the objective of the 2010 Greek programme was to stabilise its economy and financial system "so as to ensure that Greece remained in the euro area."
"These aims were shared by all the troika institutions and Greek government ... and they continue to be valid today," he said.
The IMF report recognised successes too, such as labour market and healthcare system reform, O'Connor said, noting that it also "highlights that Greece did not leave the eurozone" — which is regarded as a major achievement.
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