Wednesday, November 14, 2012
As Creditors Spar, Athens Waits for Aid
Wall Street Journal
November 13, 2012
The International Monetary Fund, criticized for decades for prescribing harsh medicine to heavily indebted governments, is pressing reluctant euro-zone governments to go easy on Greece.
It is a fight the IMF will be hard-pressed to win. It is scaling down the money it lends to Greece, and, as it does so, its influence weakens. It has lent Greece about €22 billion ($28 billion), and has set aside another €26 billion to lend until 2016. The country's main creditor group—the 16 other euro-zone governments led by Germany—are calling most of the shots.
IMF officials have repeated that they want to see a realistic agreement in place to back up the release of a new slice of Greek aid.
The institution has become increasingly skeptical about the euro zone's prescription of slashing budgets to get debts under control because it has exacted a heavy toll and destroyed economic growth.
It also argues that the credibility of Greece's economic program—and returning the economy to health—hangs on getting Greece's debt down to manageable levels.