IMF Stands By Its Mistakes

Days after the International Monetary Fund (IMF) admitted vastly underestimating the effects of austerity in Greece it demanded as part of a Troika of lenders putting up bailouts, an agency spokesman said officials there would still have done what they did, even knowing what it wrought for the country.
During a media briefing IMF spokesman Gerry Rice accepted a barrage of questions regarding Greece and the mea culpa of a report detailing how the top economists at the agency all erred, although many other analysts had pointed out that pay cuts, tax hikes and slashed pensions would drive down revenues, create record unemployment and close businesses – all of which happened.
Rice tried to counter the criticism on the assessment report on the Greek program, arguing that the published document was an evaluation of the program that started in 2010 for Greece and not the current program that started in 2012.
The evaluation report is a formal process, whose aim is “to integrate knowledge from current programs for future operations,” Rice said. He pointed out that rigorous self-assessment is one of the characteristics of an international organization and added that “this program has already incorporated some of the main lessons that have emerged since 2010.”
But he admitted that, “given the same situation, with similar information, we would probably take the same decisions today.” Asked whether Greece was sacrificed to save Europe, with a troubled bailout, Rice said, “We must not forget the intense unprecedented crisis Greece was facing in 2010 with a need for a quick reaction.”
He added that, “After 2010 there was a global and European recession and Greece there had political instability. Within this general framework, the evaluation report examines how some things could have been done differently.” He said despite the grave mistakes that Greece is on the road to recovery because of them.
He acknowledged, however, that there still might be a need for debt reduction in Greece by giving another so-called “haircut” to investors. He said the IMF now estimates – he didn’t say if would be accurate – that Greece will require further reduction of its debt, but the international organization “does not see its participation in further negotiations to reduce Greece’s debt at this phase. Europe should honor its commitment in this direction, so that the debt reaches 124% of GDP by 2020 and drop below 110% of GDP in 2022.”