It hasn't attracted much media coverage, but the IMF last week conceded that it erred in the measures it imposed on Greece. One does have to wonder what these so-called experts were doing - let alone abrogating giving due consideration to what the fallout of their determinations would have on the Greek people and on the country's economy.
"The International Monetary Fund released an internal report on Wednesday that sharply criticizes its first bailout program for Greece, the latest in a series of partial mea culpas as the fund reassesses the austerity that it has insisted on for ailing, debt-plagued economies.
The 50-page report, titled “Greece: Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement,” acknowledges major mistakes in Greece’s first bailout, which totaled about $143 billion and came into effect in 2010. The fund bent or broke three out of four of its own rules with the lending program, the report concludes. It also seriously underestimated the severity of Greece’s downturn.
The first bailout failed to set Greece on a sustainable path. “Market confidence was not restored, the banking system lost 30 percent of its deposits, and the economy encountered a much deeper-than-expected recession with exceptionally high unemployment,” the report said. In 2012, the I.M.F. and its partners, the European Commission and the European Central Bank, agreed to a bigger second program, totaling about $170 billion and requiring Greece’s private sector bondholders to accept losses of at least 50 percent. The Greek economy has been shrinking for six consecutive years, with no end in sight, erasing a full decade of growth. The unemployment rate has hit 27 percent.
The report said that the fund miscalculated the so-called multiplier, or the effect that adding or subtracting a dollar of government spending would have on the broader economy during the downturn. It underestimated the scale of what has proved to be a devastating Greek depression, fueled in part by sharp government spending cuts and tax increases."
"The International Monetary Fund released an internal report on Wednesday that sharply criticizes its first bailout program for Greece, the latest in a series of partial mea culpas as the fund reassesses the austerity that it has insisted on for ailing, debt-plagued economies.
The 50-page report, titled “Greece: Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement,” acknowledges major mistakes in Greece’s first bailout, which totaled about $143 billion and came into effect in 2010. The fund bent or broke three out of four of its own rules with the lending program, the report concludes. It also seriously underestimated the severity of Greece’s downturn.
The first bailout failed to set Greece on a sustainable path. “Market confidence was not restored, the banking system lost 30 percent of its deposits, and the economy encountered a much deeper-than-expected recession with exceptionally high unemployment,” the report said. In 2012, the I.M.F. and its partners, the European Commission and the European Central Bank, agreed to a bigger second program, totaling about $170 billion and requiring Greece’s private sector bondholders to accept losses of at least 50 percent. The Greek economy has been shrinking for six consecutive years, with no end in sight, erasing a full decade of growth. The unemployment rate has hit 27 percent.
The report said that the fund miscalculated the so-called multiplier, or the effect that adding or subtracting a dollar of government spending would have on the broader economy during the downturn. It underestimated the scale of what has proved to be a devastating Greek depression, fueled in part by sharp government spending cuts and tax increases."
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