A few hours after the International Monetary Fund acknowledged “notable failures” in tackling Greece's first international bailout, the European Commission on Thursday defended its handling of the crisis.
“We fundamentally disagree,” EC spokesman Simon O'Connor said of the IMF report adding that an earlier restructuring of the Greek debt, as suggested by the Washington-based organization, would have led to “devastating consequences.”
“The report ignores the interconnected nature of the euro area member states,” O'Connor said.
“A private sector debt restructuring would have certainly risked systemic contagion if we had done it at that stage,” he said adding that such move would have “severely undermined” the program.
The spokesman also rebuffed criticism that not enough is made to identify growth enhancing structural reforms.
“We fundamentally disagree,” he said while stating his optimism about the future of Greece's economy.
“Today the reform program is on track and there are growing signs of stabilization and increasing confidence in Greece,” he said, adding however that “much remains to be done.”
The IMF acknowledged on Wednesday that it underestimated the damage done to Greece's economy from spending cuts and tax hikes imposed in the first bailout.
A report looking back on the bailout said the IMF veered from its own standards to overestimate how much debt Greece could bear, and should have pushed harder and sooner for private lenders to take a “haircut” to reduce Greece's debt burden.