Watchdog in blistering attack on IMF’s role in Eurozone bailouts
The International Monetary Fund (IMF) has been slammed by its own watchdog for a string of failures in its handling of the Eurozone crisis.
The IMF's Independent Evaluation Offices (IEO), which watches over the global rescue fund, said the body found itself in an unprecedented situation, but failed to act with the "agility", "accountability and transparency" that would have been expected.
It claimed the body was too optimistic in setting growth forecasts for some bailed-out nations and, by teaming up with the European Commission and the European Central Bank (ECB) to form the troika, left itself open to accusations of political interference. Like most others, the IMF also failed to identify some key risks during the midst of the crisis, the IEO said.
"The IMF's performance [during the bailouts] was uneven. … The IMF lost its characteristic agility as a crisis manager and because the European Commission negotiated on behalf of the Eurogroup, the troika arrangement potentially subjected IMF staff's technical judgments to political pressure from an early stage," the IEO stated.
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It went on to argue: "The IMF's handling of the Eurozone crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently."
Christine Lagarde said the IMF's role in the Eurozone crisis was "a qualified success." She said: "The crisis in the Eurozone was unprecedented. Coming against the backdrop of the global financial crisis, the risks of broader contagion were high."
Lagarde said the Fund's involvement helped to stem system risk and restored growth and market access in countries such as Greece and Cyprus.
The IMF previously had to row back on its claims austerity would damage the UK economy after George Osborne's policies did not stop the UK becoming the fastest growing economy in the G7.