ECONOMY

IMF was originally split on the purpose of the Greek bailout

Nearly one in three member states of the International Monetary Fund (about 40 countries) expressed serious doubts about the point and the sustainability of the Greek bailout program in 2010, stressing the need for a reduction of the country’s public debt.

This is evident in classified documents and notes from a dramatic meeting of the fund on May 9, 2010 – when the governing board of the IMF approved of the first Greek bailout – which The Wall Street Journal revealed on Tuesday.

Objections to the Greek program came mainly from representatives of non-European countries in Africa, the Middle East and Latin America. Representatives of Russia, Switzerland, Canada and Australia also appeared on their side.

“The alternative to a voluntary restructuring of the debt should have been on the table,” the representative for Argentina told the IMF board, according to the report. His Brazilian counterpart stressed that “the architecture of the program could be wrong and eventually doomed to failure. This is about the bailout of the private creditors of Greece and mainly the European credit institutions.”

One of the participants in the IMF meetings at the time told the Wall Street Journal on condition of anonymity that “this was not a program for Greece but for the eurozone.”

The European Commission refused to comment on or off the record on the report, after being approached by Kathimerini on Tuesday, but Commission sources pointed to an official response by Brussels to the IMF experts’ report last June – dubbed the obituary of the first bailout agreement as it noted that a debt restructuring should have come earlier.

The Commission responded at the time that the IMF had also stopped short of supporting in 2010 the restructuring of the Greek debt, but agreed to the program to avoid the risk a Greek default would have entailed for the eurozone.