Has the IMF ‘bailed-out’ of the Greek bail-out
The International Monetary Fund (IMF) is major cause of poverty in African countries today. Despite claims that they will reduce poverty in Africa, it is widely accepted that most of the debts, as a cause of poverty in Africa, are due to the policies of the IMF.
Its programmes have been heavily criticized over the years because they result in poverty scenarios most of the time. The IMF polices are very different now from what they were originally intended for. This monetary institution was first formed by 44 nations at the Bretton Woods Conference in 1944 with the goal of creating a stable framework for the post-war global economy.
The IMF in particular, was originally formed to promote steady growth and full employments by offering unconditional loans to economies in crises and establishing mechanisms to stabilize exchange rates and facilitate currency exchange.
Much of these visions never came to reality. Pressure from the US government made the IMF start offering loans based on strict conditions. Critics have said that these policies have reduced the level of social safety and worsened labour and environmental standards in developing countries.
The IMF is now trying to shed its awful reputation as a lender of last resort that resorts to any tactic to profit from citizenry misery. If it doesn’t gets its money back in full, it loots state assets. This is what the IMF is famous the world over for.
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The IMF can see that the Greek crisis is going to turn into a catastrophe and wants no further participation. The Troika is no longer.
On June 11th The IMF dramatically pulled out of talks with debt-stricken Greece on Thursday after it accused Athens of failing to compromise over labour market and pension reforms.
On July 20th Greece repaid the roughly 2 billion euros ($2.2 billion) it owed to the IMF.
“I can confirm that Greece today repaid the totality of its arrears to the IMF, equivalent to SDR 1.6 billion (about EUR 2.0 billion). Greece is therefore no longer in arrears to the IMF,” said Gerry Rice, director of communications at the IMF in a statement on Monday.
Having been paid, the IMF’s position is that the most likely outcome for Greece – is that Greece’s debts would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession. That slide has been cataclysmic – the economy is in meltdown.
IMF documents state that under the baseline scenario “significant concessions” are necessary to improve Greece’s chances of ridding itself permanently of its debt financing woes. In other words, the IMF has stated that without massive debt relief there will be no IMF participation in Bailout number three.
The vast majority of the ‘mainstream’ Western media seem quite convinced that the final deal has already been signed off and already ratified to produce the Greek bailout. It is clear to the Troika that this is no longer a bail-out. It is clear to the IMF that is no longer a bail-out.
Angela Merkel has said that she expects the IMF to take part in a new €86bn (£60bn) bailout for Greece, as the German chancellor prepares to face Bundestag opposition to the package in a vote on Wednesday. In an attempt to reassure sceptical MPs, Merkel said the head of the IMF, Christine Lagarde, would ensure the fund’s participation if conditions on Greek pension reform and debt relief were met.
This is a different narrative to Christine Lagarde’s. Lagarde is adamant that Greek debt needs a huge ‘haircut’ in order to make the debt sustainable. If it is not sustainable, the IMF’s position is simple – they will not participate. Lagarde cannot be more clear than saying just this weekend – “I remain firmly of the view that Greece’s debt has become unsustainable,” Lagarde said. She called on Europe to make “concrete commitments … to provide significant debt relief, well beyond what has been considered so far”.
Lagarde also said she will not commit the IMF to joining the latest bailout until the board has reviewed the agreement, probably in the autumn. Officials said they want to see more details about reforms, particularly to pensions. The delay will also give unelected European leaders time to consider their stance on a fellow nation state bankrupted by their policies.
German finance minister Wolfgang Schäuble reiterated his opposition to an outright writedown of the face value of Greek debt in an interview with Deutsche Welle published on Saturday. He said the scope for milder forms of debt relief, like extending debt maturities, was “not very big”, Reuters news agency reported. Stubble’s pathetic attempt to elongate Greece’s intergenerational pain was consigned to the file marked “B”.
The IMF responded and taken an equally hard line, warning that, without an “explicit and concrete agreement” on debt relief, the fund will NOT participate in a new bailout.
The IMF is batting for the Greeks as the world watches Germany beat Greece whilst it is on its knees.
Lagarde does not believe that Germany will accept a loss on its massive loans to Greece. The German people will not either. Merkel is in deep trouble. Lagarde will lose face if she backs down on behalf of the IMF. She is still very well connected with EU ministers, she knows just how bad this deal really is and they stand to lose considerably as Germany will continue to loot Greece until there is nothing left to take.
In the meantime, Germany wants to keep Greece in the union and paying the interest on its debts, but they don’t want to have to tell their citizens that they will be helping to bail out the Greeks. So German officials would be happy with a Greek bail-in. And they would also be happy to turn over assets of wealthy Greeks who put their money in German banks who put it there for safe keeping. Cyprus 2.0
Syriza, the new Greek government that intended to rescue Greece from austerity, has come a cropper. The government relied on the good will of its EU “partners,” only to find that its “partners” had no good will.
The Greek government did not understand that the only concern was the bottom line, or profits, of those who held the Greek debt.