Last week’s dispute between Brussels and the IMF over the Greek bailout is getting worse. Less than a week away from an important Greek debt payment, both parties have been forced to postpone an agreement on another Greek bailout due to their inability to agree on a debt target or timetable for Greece.
The disagreement came to the fore at a highly publicized press conference, where representatives of the EU and IMF openly bickered about the specifics of Greece’s debt timetable in front of a group of reporters. The Financial Times reports:
In a rare breach, Mr Juncker told a post-meeting press conference the target would be moved to 2022, prompting Ms Lagarde to insist the IMF was sticking to the original timeline. When Mr Juncker again insisted it would be moved – “I’m not joking,” he said – Ms Lagarde appeared exasperated, rolling her eyes and shaking her head.
“In our view, the appropriate timetable is 120 per cent by 2020,” Ms Lagarde said. “We clearly have different views.” Officials will meet again November 20 in an effort to reach agreement, Mr Juncker said.
The Greek economy has been consistent in one thing and one thing only since the financial crisis began: It has consistently turned in a worse economic performance than “experts” predicted.
Given that, the IMF very sensibly thinks future estimates of Greek growth should be cautious. EU finance ministers, however, can’t accept that, because realistic projections of Greek growth mean that EU governments have to accept that they will have to take haircuts on the value of those loans if Greece is to have any hope of ever finding its balance. That in turn would enrage taxpayers, so European finance ministers want to keep playing “let’s pretend” a little while longer. The IMF, for its part, doesn’t want any part of this idiocy, leading to this very unusual public spat between major world leaders.
Things are not getting better in Europe, and the Europeans are not getting any closer to a solution. And remember: Greece is one of Europe’s smallest and most easily fixed problems.