"The International
Monetary Fund has admitted to major missteps over the past three years in its
handling of the bailout of Greece, the first spark in a debt crisis that spread
across Europe.
In an internal document marked
"strictly confidential," the IMF said it badly underestimated the
damage that its prescriptions of austerity would do to Greece's economy, which
has been mired in recession for the last six years.
But the fund also stressed
that the response to the crisis, coordinated with the European Union, bought
time to limit the fallout for the rest of the 17-nation euro area.
The IMF said that it bent its
own rules to make Greece's burgeoning debt seem sustainable and that, in
retrospect, the country failed on three of the four IMF criteria to qualify for
assistance."
"The paper added that the targets and the underlying macroeconomic projections weren't revised to reflect what was actually happening in Greece for 18 months, until December 2011.
The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost 17% in real gross domestic output instead. The plan predicted a 15% unemployment rate in 2012. It was 25%.
"The paper added that the targets and the underlying macroeconomic projections weren't revised to reflect what was actually happening in Greece for 18 months, until December 2011.
The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost 17% in real gross domestic output instead. The plan predicted a 15% unemployment rate in 2012. It was 25%.
Slowing the pace of austerity
would have helped Greece's economy, but wasn't politically possible, the fund
said."