The IMF, Trying to Lend Europe Credibility for a Greek Bailout, Risks Losing Some of Its Own

by Ian Talley

Wall Street Journal
May 25, 2016

The International Monetary Fund acted tough on Greek debt relief. But it appears to have caved under pressure by its largest shareholders, the U.S. and Europe.

That means Greece’s economic crisis will likely continue to simmer. It also means the fund may again forfeit some of its credibility for the sake of the eurozone.

“The agreement does little to address the underlying problems the Greek economy is currently suffering,” IHS Global Insight economists Diego Iscaro and Blanka Kolenikova said of Europe’s fresh bailout deal. “The promises of debt relief are, in our view, too distant and vague to make a material impact on confidence.”

Facing German resistance to upfront debt relief, European, U.S. and IMF officials worried another Greek standoff could fuel global economic and geopolitical instability by giving leverage to proponents of a U.K. exit from the European Union.

“There will be no repeat of last year’s drama,” said Marc Chandler, global head of currency strategy at investment bank Brown Brothers Harriman.

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