• IMF resists return to still-struggling Greece

    0

    WASHINGTON, D.C.: The Europeans want it and Athens is resigned to its presence.

    But the International Monetary Fund (IMF) has still not decided whether it will participate in the third financial bailout for Greece, and continues to set out its conditions.

    “We have not decided anything in the financial sense on a possible participation,” IMF Managing Director Christine Lagarde said in an interview published Friday.

    In 2010 and again in 2012, the world’s crisis lender was a key member of the “troika” behind the rescue plans for Greece, together with the European Commission and the European Central Bank.

    Deeply worried over a meltdown of the eurozone, the IMF had gone so far as to create a special “systemic exception” that allowed it to go beyond its loan limit rules in special situations.

    It then committed its largest loan in history to Athens, eventually close to 50 billion euros ($55 billion) in total.

    The IMF then took a central role in setting the terms for Athens’s rescue, dictating economic reforms and instituting financial discipline, which included a harsh dose of austerity, in return for its involvement.

    But the times have changed, even as the country remains in recession after five years under the stewardship of the troika.

    The IMF does not appear now so willing to join the Europeans, who agreed last summer on a new 86-billion-euro plan to support Greece.

    Yet, under pressure from the Germans, the European institutions have made the IMF’s involvement a primary condition of their deal.

    And the Greeks, who have alleged that the Fund bears “criminal” responsibility for their suffering under the first two programs, which failed to stabilize the economy, have also accepted the idea.

    “The IMF’s participation is planned. We are sticking to this commitment,” Finance Minister Euclid Tsakalotos told the German newspaper Handelsblatt this week.

    So far the IMF has remained unmoved by the appeals.

    Before it gets involved again, the Fund is pressing Greece to implement more tough austerity measures.

    It also insists that the European institutions cut Greece’s debt burden, which has reached nearly 200 percent of the size of its economy.

    “We need both legs,” IMF spokesman Gerry Rice said this week, referring to the two conditions. He stressed that the Fund remains in talks with the other parties.

    But the IMF also appears desirous of moving beyond the controversial chapter in its history, which saw it twisting its own rules to lend huge sums to Greece before, the country had stabilized its finances, or made its debt “sustainable,” as is usually required for a Fund loan.

    At any rate, the IMF can afford to wait. Unlike in 2010, the European institutions have a financial rescue mechanism now that has reduced fears of the Greece crisis dragging down Europe or the global economy.

    AFP

    Share.
    loading...
    Loading...

    Please follow our commenting guidelines.

    Comments are closed.