The International Monetary Fund has admitted to significant failures in the first Greek rescue that forced a second, larger bailout and left the country in a deep recession.
However, the global lender placed 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 late Wedesday in a review of the 2010 rescue that it overestimated both Greece’s debt sustainability and Athens’s ability to implement structural reforms.
It said there were some problems coordinating with the European Commission and the European Central Bank, its troika partners in the 110 billion euro ($144 billion) program, and that they lacked expertise.
The European Commission was more focused on European issues than the Greek situation alone, it said.
In Greece, while not officially responding to the IMF, Finance Minister Yannis Stournaras said: “It is very positive to learn from our mistakes.”
In an interview with Ta Nea daily, Stournaras added that he had said as much to the country’s international creditors three years ago in his previous capacity as the head of a Greek think tank.
The IMF, which has been assailed by member countries for committing huge funds to what some fear is an open-ended rescue, defended its actions as necessary to keep the Greek crisis from spreading through Europe and elsewhere.
At the time there was “a tension between the need to support Greece and the concern that debt was not sustainable with high probability.”
That forced the Fund to lower its own standards to approve the bailout, but even then, it admitted, it used data that was too optimistic.
The result was the much more drastic second rescue last year, which included the sweeping debt restructuring rejected the first time around.
The IMF’s mea culpa came in the wake of an earlier admission that the troika’s push for tough austerity to radically reduce Athens’ deficit was based on poor assumptions that have left the country in a protracted recession.
In the past several months the IMF has urged the European Commission and the European Central Bank to ease some of the austerity conditions of the second bailout to try and turn the Greek economy around.
In a remarkable admission, the Fund said the troika members had significant problems harmonizing their aims and roles, in part due to the Europeans’ lack of experience in sovereign rescues.
There was no clarity over which troika member was responsible for what, and the European Commission was more focused on ensuring compliance with EU standards than on figuring out how to revive Greek growth, the review said.
But the two sides were also understandably split on their focus, as the IMF traditionally deals only with single country economies in its rescues.
Meanwhile the European authorities, with Greece a member of the single currency union, “emphasized the extent of possible spillover effects within Europe.”
The IMF also pointed to the European Union’s bureaucratic approach.