IMF: Troika system delayed decisions for eurozone

The International Monetary Fund?s cooperation with European institutions over bailouts in the euro region often delayed decision making and at times excluded measures that could have been discussed, according to a report by IMF staff.

While the Fund?s work with the European Commission and the European Central Bank on joint rescue packages for Greece, Ireland and Portugal has been useful and has improved over time, it also added ?a layer of complexity? to the design and monitoring of conditions attached to the loans, IMF staff wrote in the report released on Monday in Washington.

?Institutional constraints in the euro area occasionally limited alternative policy options that could otherwise have been considered — notably, debt restructuring to strengthen debt sustainability,? according to the report, ?particularly for bank debt in Ireland and sovereign debt in Greece.?

The report, which looks at IMF programs from 2002 through September 2011, shows the tensions that exist within the so-called troika at a time the Fund may be called on to help monitor countries as part of the ECB?s new bond purchase program.

The ?troika? of international creditors is made up of the Brussels-based European Commission, the ECB and the IMF. The Fund?s report echoes the dynamics in the talks that are under way among the three institutions as they decide whether to disburse money to Greece under a second, 130-billion-euro loan, said Thomas Costerg, a European economist with Standard Chartered Bank in London. The second bailout is beyond the report?s scope.


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