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IMF in Political Bind over New Greek Bailout

by | Aug 3, 2016 | Business |

IMF in Political Bind over New Greek Bailout

Washington-The International Monetary Fund is again the target of accusations of being under Europe’s control ever since the IMF participated in the first Greek bailout in 2010.

Pressures aim at forcing the IMF to participate in the plan that was approved by the Europeans to aid Greece in 2015, while the IMF has been refusing for over two years now to grant Greece any loans.

An internal audit report issued by the IMF was highly critical. It revealed that the fund succumbed to the European pressures in 2010 and agreed to grant Greece large sums of money, ignoring with that its own internal rules and despite doubts about Greece’s creditworthiness.

The decision undermined the credibility of the IMF and led to a series of condemnations from countries claiming the fund doesn’t deal equally with all states.

The current situation is different given that fears of Greece’s collapse have subsided and the Eurozone is no longer in need for the fund’s resources as it used to.

Yet pressure hasn’t eased.

Germany has stated in black and white that IMF participation in the bailout is a condition for its own and it sees little room for discussion. German Minister of Finance declared in May that IMF will partake in 3 to 4 year programs.

An official at the fund, who refused to reveal his name, said that everyone knew that IMF was under great European pressure to have a joint program.

It is somehow difficult for the IMF to ignore the voice of the Europeans since the EU owns the largest share in its board of directors.

All of the above makes it harder for the IMF given that it has to take the bailout decision by the end of this year.

Shall IMF decide to bailout Greece again, it will be considered that it had surrendered to the Europeans again.

Former official in the IMF’s European Department Peter Doyle told AFP “That’s the conundrum they face. If they go along they look like they’re caving in; if they reject, it means that they could potentially be raising new big alarms.”

Whereas former European Department official Desmond Lachman said: “There’s a need for them to rebuild their credibility. By staying out of Greece, they could tell the rest of the world that we’ve realized that we were politically used.’”

Greece took advantage of the latest accusation and said through its government spokeswoman Olga Gerovassili: “The IMF has been neither useful nor needed in Europe.”