Greece: Past Critiques and the Path Forward

by George Hatjoullis

As promised I include this in the interest of balance to be compared with Varoufakis’ view on debt relief. Both authors agree on debt relief. However, Blanchard places it in a different context which is less supportive of the Varoufakis spin. When the dust has settled I shall publish my own version of one key aspect of this history which differs from the emphasis placed by Blanchard. I shall publish from personal experience. I disagree with one important aspect of BLanchard’s account and support that of Varoufakis. However, as I keep saying, agreeing on the problem and its cause does not mean I agree on the solution.

iMFdirect - The IMF Blog

IMG_0248By Olivier Blanchard

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All eyes are on Greece, as the parties involved continue to strive for a lasting deal, spurring vigorous debate and some sharp criticisms, including of the IMF.

In this context, I thought some reflections on the main critiques could help clarify some key points of contention as well as shine a light on a possible way forward.

The main critiques, as I see them, fall under the following four categories:

  • The 2010 program only served to raise debt and demanded excessive fiscal adjustment.
  • The financing to Greece was used to repay foreign banks.
  • Growth-killing structural reforms, together with fiscal austerity, have led to an economic depression.
  • Creditors have learned nothing and keep repeating the same mistakes.

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