A former finance minister and an ex-IMF representative share their views on the timing of the country’s debt restructuring
By Tom Ellis
Greece’s ex-Finance Minister Giorgos Papaconstantinou and the country’s former representative at the International Monetary Fund, Panayiotis Roumeliotis, give diametrically opposite views on how Athens’s signing up to the EU-IMF bailout mechanism in May 2010 was handled.
Speaking to Sunday’s Kathimerini, Roumeliotis, who served at the IMF as alternate executive director under Dominique Strauss-Kahn, said that both he and the IMF chief had pushed the government in Athens at the time to bring up the issue of a restructuring of privately held Greek debt, believing that the fiscal adjustment program designed for Greece would be difficult, if not impossible, to implement without a significant write-down.
Roumeliotis argues that close aides to then-Prime Minister George Papandreou reacted negatively to the proposal, adding that a recent report by the IMF acknowledges that internal devaluation is very difficult for a country with a high public debt to achieve.
For his part, Papaconstantinou, who was the country’s finance chief during that crucial period, says that Greece’s eurozone partners and the European Central Bank would never have consented to restructuring the debt of a country with a primary deficit of 24 billion euros, arguing that such a move would have triggered panic in the banking sector and led to an immediate default and an economic and social meltdown.
As far as the IMF’s involvement in the Greek rescue is concerned, Papaconstantinou says that Athens applied not to the Fund, but to the European stabilization mechanism after being shut out from borrowing on international markets.