The European Union’s handling of three bailout programs for Greece during the eurozone’s financial crisis had several weaknesses and was only partly successful, European auditors said on Thursday.
EU and international creditors have channeled over 350 billion euros ($412.1 billion) of financial aid to Greece since 2010 to prevent the country’s default and reduce contagion to the rest of the eurozone.
To get the funds, Athens had to embark on sweeping structural reforms and unpopular belt-tightening measures.
The programs “promoted reform and avoided default by Greece, but the country’s ability to finance itself fully on the financial markets remains a challenge,” the European Court of Auditors (ECA) said in a report on the Greek bailouts.
The ECA is responsible for assessing EU finances. Last year, it said the Commission’s management of the bailouts for Ireland, Portugal, Hungary, Latvia and Romania was “generally weak.”
The third Greek program is still ongoing as Athens completes agreed reforms. The 86-billion-euro bailout ends in August, and Greece is by then expected to have fully regained access to market funding.
The ECA report, which focused on the work of the European Commission, said the programs “only helped Greece to recover to a limited extent.”
The European Central Bank, which together with eurozone states and the International Monetary Fund contributed to the programs, was not assessed because it declined to provide data, questioning the auditors’ mandate to ask for it, ECA said.
The auditors found “weaknesses” in the design of the Greek programs. “Some key measures were not sufficiently justified,” the report said. The ECA stressed that a large chunk of the 45 billion euros pumped into the banking system may never be recovered.
“For other (measures), the Commission did not comprehensively consider Greece’s implementation capacity in the design process and thus did not adapt the scope and timing accordingly,” it said.
In a written reply included in the ECA report, the Commission said that “the design and implementation of crucial reforms took place in the wider context of the prevailing difficult economic situation as well as severe instability in the financial markets.”
The Greek bailouts were carried out during the worst financial and economic crisis since the World War II.
The Commission also stressed that the application of the programs was complicated by the political crisis that struck Greece during the bailouts, causing the collapse of governments.
The Commission concluded that, despite the complex circumstances, the key objectives of the programs were achieved by averting Greece’s default and ensuring financial stability in the eurozone. [Reuters]