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Agree that international creditors this week on further debt reduction for Greece? Secret files show that was fought in the IMF by 2010 over the first bailout.

In 2010, Greece had ever allowed to get a multibillion dollar bailout? Research by the “Wall Street Journal” show, that the International Monetary Fund (IMF) was deeply divided internally, then decided whether the immense grants of the Greek economy would help at all.

What secret documents now show, is contrary to the public statements of the IMF and could the current discussion about a debt relief for Greece, in addition to heat up. Germany and other European states reject a haircut for the government in Athens to protect their own taxpayers. Nevertheless, it could ultimately lead to a debt relief, the IMF because the future will only be transferred financial assistance to Greece, when the debt of the country’s total drops considerably.

The issue will be high on the agenda when finance ministers from around the world come together this week to the annual meeting of the IMF in Washington.

Greece Bailout:Almost a third of IMF decision-makers had concerns

The IMF that so determined for a debt reduction in Greece begins, some IMF officials is to report, among other things, that the big bailout from the beginning was highly controversial. The IMF Executive Board decided the financial package for Greece on 9 May 2010. But the decision to file – documents marked “secret” or “Strictly Confidential,” which could see the “Wall Street Journal” – offer a rare glimpse into the inner workings of the IMF, which should prevent a rapidly ausweitendes financial disaster then.

Almost a third of all the members in the body, which together represent more than 40 non-European countries, had, according to the filing. Then serious doubts about the bailout for Greece

Many have argued that the Greek rescue program aufbürde the whole burden, while asking nothing of the European creditors. Several IMF officials said at the time, the bailout would go wrong if creditors Greece would not also adopt some of its staggering debt.

“The alternative to a voluntary debt restructuring would have to be on the table,” said about Pablo Andrés Pereira at the critical meeting in 2010, who was then the Executive Director for Argentina in the decision-making body. The fund, Pereira said at the time, was in danger of “the inevitable” – a Greek default – only “to delay and perhaps even worse.”

Directors from Brazil, Russia, Canada and Australia – which together represented 38 other countries – speaking loudly Minutes about the “enormous risk” of the program. This could be “inappropriate and ultimately unsustainable” in their view prove or simply as a “rescue private owners of Greek government bonds, mainly of European financial institutions,” the Brazilian Executive Director at the IMF warned that time.

The U.S. and most European directors, more than half of the voting rights in the IMF to be united, but then managed to win enough supporters for the rescue program.

The loan program required the Greek government to strict spending cuts and tax increases. A debt restructuring – such as debt relief, on lower loan interest rates or extending the repayment period – was not provided therein. This saved those who held Greek debt (and those were mainly European banks), the losses would be accompanied by a restructuring.

Greece Economy Rescue:Put Europe interests of the Greek ?

Some of those who were at that time against the IMF bailout program, and also some other IMF staff believe that the interests of European powers over which the Greeks were made. Since 2009, Greece’s economy has shrunk by one-fifth, and the unemployment rate in the country has risen to almost 28 percent. The embossing the current position of the IMF, is now negotiating with the Europeans over a debt restructuring, say current and former IMF official.

“The Greek rescue was no program for Greece but for the euro zone itself,” says one who was present at the IMF meeting in 2010 while, in retrospect.
The confidential documents show that several IMF directors very skeptical saw the economic forecasts from the beginning. They called the outlook “somewhat optimistic” or “overly good”.

An IMF spokesman said, the crisis fund continues to expect an upturn in Greece, parallel to the slow-reaching economic reforms. “But we are more conservative than before, and we certainly recognize that Greece will need more time to catch up on the growth side,” said the spokesman.

 

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