The International Monetary Fund’s Executive Board acknowledged serious failures and omissions on its part in the implementation of several programs, including that of Greece during the period 2011-2017 and decided to update the planning, prerequisites, and performance of its programs.
In fact, this decision was accompanied by a report by IMF executives released on Monday evening and includes an extensive reference to the over-optimistic outlook made by the Fund for Greece, the excessive importance given to fiscal adjustment and to the IMF’s incorrect approach to the sustainability of Greek debt.
On the issue of debt, the Fund shockingly admitted that the delay in the restructuring of the Greek debt was a deliberate decision to rescue the eurozone banks that had been exposed to a large portion of Greek state bonds. It should be noted that from 2011 to the beginning of 2012 Greece repaid bonds worth 50 billion euros, most of which ended up in the portfolios of European banks.
The report makes special reference to the weakness of the IMF programs to effectively deal with the problem of non-performing “red” loans (NPLs).
It underlines that in countries such as Cyprus, Greece, Ireland, and Portugal, non-performing loans increased by an average of 10.5% despite the fact that financial stability was one of the programs’ priorities in these countries.
“NPLs began to decline only after the end of the program for Ireland and Portugal, and so far they have increased for Cyprus and Greece, preventing the resumption of credit expansion. Experience from these countries reflects the challenge of reducing non-performing loans over the program period”, the report said.
Despite the IMF’s shocking admission that it failed in the implementation and its projections in the Greek “rescue” program, the international organisation made no mention of holding any of its executives involved in the Greek program accountable for their catastrophic incompetence.