Saturday, February 1, 2014

"Im Memory of May 2010" - IMF

On May 9, 2010, the IMF sent an Office Memorandum to its board accompanying its recommendation for approval of the Greek rescue package. Below are some interesting quotes from that memo.

* "The Chinese and Swiss Chairs emphasized that growth will eventually determine Greece's ability to manage its debt burden".

* "The exceptionally high risks of the program were recognized by IMF staff itself".

* "IMF staff admits that the program will not work if structural reforms are not implemented".

* "IMF staff acknowledges that the program will certainly test Greek society".

* "Several Chairs (Argentina, Brazil, India, Russia and Switzerland) lamented that the program has a missing element: it should have included debt restructuring and Private Sector Involvement".

* "The Swiss ED forcefully echoed the concerns about lack of debt restructuring in the program".

* "IMF staff pointed out that debt restructuring has been ruled out by Greek authorities".

It is interesting to note that the only European country departing from the EU party line ("Greece is merely a crisis of liquidity") was the non-EU member Switzerland. Were only those European countries free to speak their voice which were not EU members?


  1. >"Were only those European countries free to speak their voice which were not EU members?"

    I did not think that you are so naive to believe that a politician ever is free to speak _his_ voice. Imho it is always "His Masters Voice" - that old and famous brand you know?

    Regarding Switzerland: It all depends, sometimes on weather conditions or similar ...

    H. Trickler


    Trully i m confused, page 3 " Staff pointed out that debt restructuring has been ruled out by Greek authorities themselves"
    French mainly and German and other eu members were in favor of debt restructuring?


    1. The link you provided was hyperlinked in my article (first line).

      Media reporting was fairly unanimous that Dominique Strauss-Kahn (IMF) tried his best to convince PM Papandreou that a debt restructuring was needed. The memorandum confirms what media had reported, namely that PM Papandreou adamantly refused. Whether he refused out of his own will or out of fear that there would be punitive action by the EU will never be determined. I am not aware that any EU member forcefully recommended a debt restructuring at the time.

    2. Funny how one defined "unanimity"


      Merkel rejects Greek debt restructuring

      Panagiotis Roumeliotis, greek representative in IMF and the first to "empty the sack" on what had happened, had said that Strauss-Kahn was directly approaching the EU for debt restructuring, but finding a "german wall" from Merkel. He also said, that sadly, Papandreou has several advisors that "influenced by the ECB, were also against debt restructuring".

      However, if you think that George Papandreou was calling the shots in Brussels, well...let us leave it there... Papandreou's biggest mistake was walking in there, believing that he would be treated "like a fellow member in need", as he liked to say.

      Strauss-Kahn himself, had warned him in December that the other EU countries would not have accepted unilateral actions by Papandreou. So much for the "adamant" options of Papandreou...

    3. Here are some new statements by Papandreou, made today:

      "Merkel was the one that imposed the partecipation of the IMF, because she didn't trust the EU Comission for supervising the greek program. When i was PM and the markets were saying that we will default, i didn't have anywhere to go."

      This is the man that "adamantly" resisted. Let me tell you one thing about George Papandreou. He is the same man, that didn't hesitate to humiliate himself to his entire nation, first declaring a referendum, only to revoke it a day later, after getting out of the Merkel-Sarkozy meeting like a beaten dog.

      If the IMF/EU had pressured him for debt restructuring, he would have accepted not only that, but he would even agree on being spanked by Merkel.

      Simply, victory has many fathers, defeat has none. The once gorgeous salvation plan, isn't something to brag about, so all sides are now playing the "blame game". "No, it wasn't me, it was him. No! It was the other".

  3. I remember very well that President Sarkozy was against any participation of private sector involvment for fear that French banks (they have at least 50 b € exposure in banks-bonds) will take large losses. When some Greeks propose -without insistence, its true and informally- for a debt restructuring 2 were the issues: 1. French and German banks to save as much as they could (confirmed by Memorandum) 2. Greeks should have punished.
    Finally-to your chargement- a debt restructuring to a large extend could have affected in a way public sector in Germany-France? They would pay?