Euro zone countries tried in vain to stop the IMF publishing a gloomy analysis of Greece’s debt burden which the leftist government says vindicates its call to voters to reject bailout terms, sources familiar with the situation said on Friday to Reuters, as its exclusive report wrote
The Europeans were also concerned, the Reuters exclusive artcle further reveals, that
the report could distract attention from a view they share with the IMF that the Tsipras government, in the five months since it was elected, has wrecked a fragile economy that was just starting to recover.
“It wasn’t an easy decision,” an IMF source involved in the debate over publication said. “We are not living in an ivory tower here. But the EU has to understand that not everything can be decided based on their own imperatives.”
The board had considered all arguments, including the risk that the document would be politicized, but the prevailing view was that
all the evidence and figures should be laid out transparently before the referendum.
“Facts are stubborn. You can’t hide the facts because they may be exploited,” the IMF source said.
The document released in Washington on Thursday said Greece’s public finances will not be sustainable without substantial debt relief, possibly including write-offs by European partners of loans guaranteed by taxpayers.
It also said Greece will need at least 50 billion euros in additional aid over the next three years to keep itself afloat.
Publication of the draft Debt Sustainability Analysis laid bare a dispute between Brussels and the Washington-based global lender that has been simmering behind closed doors for months.
Greek Prime Minister Alexis Tsipras cited the report in a televised appeal to voters on Friday to say ‘No’ to the proposed austerity terms, which have anyway expired since talks broke down and Athens defaulted on an IMF loan this week.
It was not clear whether an arcane IMF document would influence a cliffhanger poll in which Greece’s future in the euro zone is at stake with banks closed, cash withdrawals rationed and commerce seizing up.
“Yesterday an event of major political importance happened,” Tsipras said. “The IMF published a report on Greece’s economy which is a great vindication for the Greek government as it confirms the obvious – that Greek debt is not sustainable.”
At a meeting on the International Monetary Fund’s board on Wednesday, European members questioned the timing of the report which IMF management proposed at short notice releasing three days before Sunday’s crucial referendum that may determine the country’s future in the euro zone, the sources said.
There was no vote but the Europeans were heavily outnumbered and the United States, the strongest voice in the IMF, was in favor of publication, the sources said.
In Brussels, the way the IMF communicated the findings was seen as confusing, misleading and politically unhelpful.
The European Commission had produced its own debt sustainability analysis, based partially on IMF data, which is less pessimistic in its scenarios and is one of the documents mentioned on the Greek referendum ballot paper.
Diplomats said the IMF’s publication of the study was a way of making clear it would only be part of any future loan pact with Greece if the Europeans included debt relief in the mix.
Germany and its north European allies have said the IMF’s presence is indispensable both to win parliamentary backing for aid for any euro zone partner, and to keep the European institutions honest. Berlin suspects the European Commission of being too soft on Greek efforts to wriggle out of reforms of pensions, taxation, public sector wages and labor law.
The European Central Bank, ( which has made Banks close in Greece as soon as the referendum was announced , we note) the third partner in what used to be called the “troika” of bailout enforcers, is also keen to keep the IMF involved, the Reuters article writes.