♠ Posted by Emmanuel in IMF
at 7/28/2016 05:45:00 PM
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| The IMF's Greek interventions are criticized by its own independent evaluation office. |
File this one under: no @#$%, Sherlock. First, the IMF did not predict how out of hand the situation in Europe could become and was thus unprepared for its onslaught:
The IMF’s pre-crisis surveillance mostly identified the right issues but did not foresee the magnitude of the risks that would later become paramount. The IMF’s surveillance of the euro area financial regulatory architecture was generally of high quality, but staff, along with most other experts, missed the build-up of banking system risks in some countries. In general, the IMF shared the widely-held “Europe is different” mindset[...]Second, being part of a "troika" including the European Commission and the European Central Bank made the IMF just another voice in a politicized process where it lacked its usual abilities to conduct its activities independently and with due discretion. That is, the IMF was never in the figurative "driver's seat" and was a Johnny-come-lately to what was already arranged by the others:
In the circumstances of these programs, where there was more than one conditional lender, the troika arrangement (in which the Fund worked with the European Commission and the European Central Bank) proved to be an efficient mechanism in most instances for conducting program discussions with national authorities, but 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.Third, as a result, traditional oversight in providing Greece and the rest with far more monies than they were entitled to--outside regular financing arrangements--was bypassed:
In May 2010, the IMF Executive Board approved a decision to provide exceptional access financing to Greece without seeking preemptive debt restructuring, even though its sovereign debt was not deemed sustainable with a high probability. The risk of contagion was an important consideration in coming to this decision. Th e IMF’s policy on exceptional access to Fund resources, which mandates early Board involvement, was followed only in a perfunctory manner.Current IMF Managing-Director Christine Lagarde dismisses much of the criticism over political interference, though. Her main line of reasoning is that the events were unprecedented and hence the IMF had to act quickly lest it be overtaken by events (and left unsaid but implied, global contagion effects):
In a statement released at the same time as the report, Strauss-Kahn's successor Christine Lagarde rejected the premise that there was European political influence on IMF decisions. Aside from that point, she stressed that the euro area crisis had been "extraordinary" and "unprecedented."My belief remains unchanged:the IMF likes to portray its decision-making as "technocratic" in the sense that only economic criteria--as opposed to political ones--are taken into consideration. However, there is a large body of work in the IPE canon that begs to differ with this claim. Exhibit A nowadays is of course lending to war-torn Ukraine since the IMF has previously not lent to a country in the midst of civil war. What is different this time? Same as with Greece and the rest--Europe.
"The IEO's reports echo many of the lessons that we have drawn from our own internal assessments ... We must constantly aspire to do better in avoiding crises, managing crises, and learning from the past."
