World Economy

IMF lambasts how it handled Greece and the euro zone crisis

The International Monetary Fund (IMF) missed signs of a banking calamity, lacked independence and failed to hold countries to account, the organization's internal watchdog said in a report that sharply criticized its handling of the euro zone debt crisis.

IMF officials suffered from a "culture of complacency" and were unduly positive about the euro zone project, the IMF's Independent Evaluation Office said.

"The IMF's handling of the euro area crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently," it said on Thursday.

Louisa Gouliamaki/AFP/Getty Images

In addition, officials were potentially subjected to "political pressure" as they negotiated alongside the European Commission and the European Central Bank with countries like Greece that were bailed out during the sovereign debt crisis.

Greece, Ireland, Portugal and Cyprus all received aid from the IMF in the wake of the crisis. Greece is still receiving aid, with the European Stability Mechanism dolling out 5.7 billion euros ($6.4 billion) in June.

The bailouts of Greece and Portugal were based on "overly optimistic growth projections," the report said, and staff were insufficiently alarmed by the revelation from Greece in 2004 that it had been "grossly" misreporting its national and public sector accounts since 1997, it added.

"IMF senior staff and management downplayed the repeated warnings by mission teams of the dismal condition of Greece's public sector accounts," the report stated.

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