International Monetary Fund Managing Director Christine Lagarde admitted that the Washington-based organization has made mistakes in its handling of Greece’s debt crisis, however urging the nation’s leftist-led government to “take more ownership” of reform measures.
“We have acknowledged one mistake, which had to do with the fiscal multipliers,” Lagarde told Bloomberg Markets in an interview made public Monday, adding that the IMF and the Europeans had both underestimated the contracting impact of some of the recommended measures.
“We overestimated the ability of Greece to actually endorse and take ownership of measures that were needed, because we moved from one government to another to another to another, and it was always, ‘It’s not really our program, it’s not really our reforms, it’s not really our measures. It’s imposed by the Troika putting all members in the same bag.’ So I think that was overestimated,” Lagarde said.
Lagarde, who is about to start her second five-year term as head of the Fund, said that it was the responsibility of the IMF to assess the gauge the potential impact of economic reforms and to reestablish the credibility and the economic sovereignty of the country under the program.
“Greece cannot just continuously tag along and expect that things will be sorted out. The Greek leaders will need to take more ownership of reestablishing their country,” Lagarde said adding that she saw no risk of Greece leaving the euro area.
“We’re not out of the Greek situation yet. And I think the present circumstances with the migration and the refugees are going to strengthen the critical role Greece is playing in the EU,” she said.
Greece has depended on rescue loans since 2010. It signed a third, 86-billion-euro bailout deal last summer.