The IMF's sad story: Greek tragedy

by / Friday, 03 July 2015 / Published in Economy

ANALYSING a country’s debt sustainability sounds dry and nerdy. But the analysis the IMF prepared for Greece in late June spells out the truly tragic consequences of the Greek electorate’s decision in January to vote in a populist government led by Alexis Tsipras, the prime minister and leader of the radical-left Syriza party. Greece has gone from a position where both its economy and its underlying debt position were on the mend, to one where it will need bucketfuls of further rescue finance from official creditors together with more debt relief, the IMF shows.Worse, these calculations were made before Mr Tsipras’s reckless decision to call a referendum on the terms of a further bail-out (and to campaign for rejecting it). That has inflicted yet more damage on the economy by closing down both the country's banks and its negotiations with creditors, and caused Greece to become the first developed country to default on the IMF (though the Fund more blandly calls this going into arrears). Even if voters on Sunday vote against Mr Tsipras and support the now withdrawn bail-out proposals made by the creditors, the cost of clearing up the mess caused by the Syriza-dominated government has clearly risen dramatically.Some commentators are now arguing that the Greek economy is simply an economic misfit that is unable to cope with being in the euro area. Certainly the magnitude …<div class="og_rss_groups"></div>
Source: The Economy