IMF has made a mistake concerning Greece
The International Monetary Fund admitted “notable failures” in the Greek bailout saying that austerity measures had harmed Greek economy.
The IMF regrets mistakes made in estimating the consequences of spending cuts amid the economic contraction, excessive optimism about the nation’s ability to return to the debt markets and delaying Greek debt restructuring by private bondholders.
Greece’s economy fell by 17% since 2009 to 2012, while the IMF expected to decline by only 5.5%. Last year the nation’s unemployment level accounted for 25% versus the expectations of 15%. The fund thought that every euro of spending cuts will cause only 50-cent decrease in economic growth. In reality, it was 1.5 euro.
The European Commission has already taken a milder stance on austerity: last week it gave extra time to several European countries to meet debt-reduction targets.
Photo by Reuters