IMF’s Independent Evaluation Office on IMF rescue programs in Europe..

IMF’ IEO has been critical of IMF programs in the past as well. One can look at role of IEO in two ways. One is it provides an independent assessment of IMF programs and tells you all is not as bad as imagined in the Washington based body. The other is IMF IEO is just like any other IEO which act just as a cover up to hide the mess in the organisation. IEO keeps writing stuff and IMF keeps ignoring it.

Anyways, IEO reviews IMF’s crisis management in Europe. It says past lessons have not really been learnt:

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. Conducting this evaluation proved challenging. Some documents on sensitive issues were prepared outside the regular, established channels; the IEO faced a lack of clarity in its terms of reference on what it could or could not evaluate; and there was no clear protocol on the modality of interactions between the IEO and IMF staff.1 The IMF did not complete internal reviews involving euro area programs on time, as mandated, which led to missed opportunities to draw timely lessons.

The IMF-supported programs in Greece and Portugal incorporated overly optimistic growth projections. More realistic projections would have made clear the likely impact of fiscal consolidation on growth and debt dynamics, and allowed the authorities to prepare accordingly or persuaded European partners to consider additional—and more concessional—financing while preserving the IMF’s credibility as an independent, technocratic institution. Lessons from past crises were not always applied, for example when the IMF underestimated the likely negative response of private creditors to a high-risk program. The IMF’s performance was uneven although there were instances where IMF staff shone technically and many officials have expressed a positive assessment of the Fund’s overall contribution.

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. Conducting this evaluation proved challenging. Some documents on sensitive issues were prepared outside the regular, established channels; the IEO faced a lack of clarity in its terms of reference on what it could or could not evaluate; and there was no clear protocol on the modality of interactions between the IEO and IMF staff.1 The IMF did not complete internal reviews involving euro area programs on time, as mandated, which led to missed opportunities to draw timely lessons.

And guess what IMF MD says?

Overall, the conclusion I draw is that the Fund’s involvement in the Euro Area crisis programs has been a qualified success.

This time is hardly different. There is a reason why the second view on IEO is more true than the first view..

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