For hard-hit Greeks, IMF mea culpa comes too late
2013 06 06

By Lefteris Papadimas and Renee Maltezou | Reuters



Greeks reacted with an air of vindication and outrage at the International Monetary Fund’s admission it erred in its handling of the country’s bailout, berating an apology that comes too late to salvage an economy and countless lives in ruins.

Anger was palpable on the streets of Athens, where the EU-IMF austerity recipe that the Washington-based fund says it sharply misjudged has left rows of shuttered stores and many scrounging for scraps of food in trash cans.

"Really? Thanks for letting us know but we can’t forgive you," said Apostolos Trikalinos, a 59-year old garbage collector and a father of two.

"Let’s not fool ourselves. They’ll never give us anything back. I’m sorry for all the people who killed themselves because of austerity. How are we going to bring them back? How?"

The IMF acknowledged on Wednesday that it underestimated the damage done to Greece’s economy from spending cuts and tax hikes imposed in a bailout, which was accompanied by one of the worst economic collapses ever experienced by a country in peacetime.

A report looking back on the bailout said the Fund veered from its own standards to overestimate how much debt Greece could bear, and should have pushed harder and sooner for private lenders to take a "haircut" to reduce Greece’s debt burden.

Prime Minister Antonis Samaras told reporters the acknowledgment justified his positions. He had criticised from the outset "what the IMF has called mistakes".

"And we have been correcting those mistakes over the past year," Samaras told reporters during a visit to Helsinki.

Greeks have seen their incomes plunge by about a third since the debt crisis erupted in 2009 and prompted Greece to seek two bailouts from the EU and the IMF. The unemployment rate has hit nearly 27 percent and suicide rates have soared. Worst hit have been the youth, nearly 60 percent of whom are unemployed.

"The IMF admits to the crime," the leftist Avgi newspaper declared on its front page. Top selling newspaper Ta Nea branded it an "admission of failure".

In the corridors of power, some officials suggested the admission could strengthen their hand in future talks with the IMF, European Union and European Central Bank, collectively known as the troika, on debt relief or new austerity measures.

"It is positive that the report recognises that there were mistakes in Greece’s programme in the past and we hope that they will not be repeated in the future and then create the need for corrective action," a senior government official told Reuters.

VINDICATION

For many Greek politicians who complained for years that they were forced to sign off on the bailouts under the threat of a chaotic default and euro zone exit, it was also a moment of vindication.

"The IMF report confirms and records the positions that we have repeatedly presented in public, which formed the basis of our arguments during tough negotiations with the IMF and the other two parties of the troika," former Finance Minister Evangelos Venizelos told Reuters.

[...]

Read the full article at: reuters.com




EU rejects IMF criticism on handling Greek crisis
By JUERGEN BAETZ | Associated Press

The European Commission on Thursday defended its handling of the Greek debt crisis, saying it "fundamentally disagrees" with criticism voiced by the International Monetary Fund.

The IMF a day earlier said there had been "notable failures" in the way itself, the Commission and others handled Greece’s 240-billion-euro ($310 billion) bailout. It said the mistakes had worsened the country’s economic plight — it is now in its sixth consecutive year of recession and unemployment has risen to 27 percent.

A spokesman for the EU Commission, the 27-nation bloc’s executive arm, said restructuring Greece’s debt before granting it a bailout — as now suggested in the official IMF report — could have led to "devastating consequences" given that the 17-country eurozone back then had no appropriate firewalls.

"We fundamentally disagree," Simon O’Connor told reporters in Brussels. "The report ignores the interconnected nature of the euro area member states. A private sector debt restructuring would have certainly risked systemic contagion," he added.

[...]

"This is plainly wrong and unfounded," insisted O’Connor, the spokesman for the EU’s top economic official, Olli Rehn.

Greece had to push through deeply unpopular austerity measures including income cuts, tax increases and overhauls to its bloated public sector in return for the bailout loans.

The EU Commission together with the IMF and the European Central Bank forms the "troika" of creditors that manages the bailouts for Greece, Portugal, Ireland and Cyprus.

This week’s public dispute over the Greek deal, however, highlighted how the three organizations are increasingly at odds over key issues. Several EU policymakers, for example, have recently hinted that the bloc should be able to handle future financial emergencies without the IMF’s involvement.

Read the full article at: news.yahoo.com





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