IMF admits Greek debt mistakes

The International Monetary Fund has admitted to mistakes over its handling of the Greek debt crisis, according to an internal document released today.

IMF's admission it went too far, too fast with Greece

by - Economics Editor

The IMF's admission on Greece comes from its own review of the conditions it imposed on the first bailout in 2010 and it highlights some key failings.

A Greek flag outside parliament in Athens. Credit: Maurizio Gambarini/DPA

It said that it underestimated how much damage the austerity it imposed would do to Greece, it expected the economy to shrink by 5% but in fact it shrank by 17% between 2009 and 2012.

That unleashed poverty on millions of Greeks, triggered riots on the streets and unemployment is still rising and we learnt it is around one in every four adults in Greece at the moment.

Also the IMF said that it lent too much to Greece, sums so vast that it cannot vouch for the fact that they will be repaid and it lowered its own standards in making those loans - essentially buying time to save the rest of the eurozone.

It does defend some of the reforms, including saying that lowering wages is helping to make Greece more competitive but overall I think this is a big admission it went too far, too fast and it has implications for other countries where the IMF doles out its prescriptions.

Read: IMF admits to mistakes over handling of Greek debt crisis

IMF admits to mistakes over handling of Greek debt crisis

The International Monetary Fund has admitted to mistakes over its handling of the Greek debt crisis, according to an internal document released today.

Protesters hold a banner in front of the Greek parliament in 2012. Credit: AA/ABACA

The document said the IMF had underestimated the damage austerity measures would cause to the country - which has received two bailouts in the last three years and been in recession for the past six years.

However, it also stressed that financial support from the IMF, the European Central Bank and the European Commission had bought extra time for Greece.

The response to the crisis also gave time to other countries in the European Union, the document added.

The IMF released the document today after its contents were reported by The Wall Street Journal.

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