WSJ Says IMF Owes Greece An Apology

It’s too late to help, but an apology is long overdue to Greece because of errors the International Monetary Fund made in miscalculating the effects of austerity demanded in return for bailouts and other mistakes the agency made, a Wall Street Journal columnist has written.
Simon Nixon wrote that the IMF made major errors in helping oversee the “Greek case,” with the country’s other international lenders, the European Union and European Central Bank, who make up the so-called Troika and put up 240 billion euros ($327 billion) in two rescue packages the last four years.
It said the biggest, and one which cost Greece an earlier return to the markets, was refusing to accept that Greece could achieve a primary surplus in 2013, which doesn’t include interest on debt, the cost of running cities and towns, state enterprises, social security and some military expenditures.
Greece attained a 1.5 billion euro primary surplus which then led to the successful floating of a 3-billion euro, five-year bond, the first time since 2010 the government was able to get money from the markets, even after stiffing investors with 74 percent losses two years ago to write down its debts.
Nixon said that IMF Managing Director Christine Lagarde should apologzse to Greeks, too as she did last week to the British government. “What a shame the International Monetary Fund boss didn’t extend a similar courtesy to Greece this week,” he wrote. “IMF’s mis-steps in Greece last year had real consequences,” he added.
“The IMF’s refusal to believe that Greece would achieve a budget surplus before interest costs in 2013 led to a seven-month delay in the disbursement of crucial bailout funds,” and this resulted to a delay in Greece’s return to bond markets,” is how he put it.
But, he added, if Athens capitulated to IMF’s demands for further measures to reduce the “imaginary deficit,” it is almost certain that Greece would face a seventh consecutive year of recession.
But even if the IMF couldn’t say “I’m sorry,” he mentioned, “Its latest review of Greece’s bailout program published this week shows plenty of signs of contrition” since “It talks of “significant progress towards re-balancing the economy.”
The IMF had previously acknowledged it seriously underestimated the effects of harsh austerity measures it demanded in return for the money, but also added in its latest review that while Greece was heading toward a recovery that there was a real risk it could backslide into trouble unless it pushes ahead with reforms and meets fiscal targets.
At the same time another newspaper, the Italian La Repubblica, published an article on the extensive efforts of Greece and mentions that there are signs of recovery and an optimistic climate, but it is still early for Greeks to rejoice since unemployment and debt issues are still open.
The newspaper points out, however, that “probably Greece will need a new haircut to be able to exit from the crisis,” but mentions that “GDP rises again and Greece can hope again.”
That’s in reference to Greece restructuring its debt and walking away from a big chunk of what it owes the Troika, which would pass on the costs to the taxpayers in the other 17 Eurozone countries for generations of wild overspending and runaway patronage by successive Greek governments.