BRUSSELS, June 6 The European Commission on
Thursday rejected the International Monetary Fund's view that
lenders mishandled the first Greek bailout in 2010 by allowing
Athens to delay a debt restructuring to 2012.
The Commission - which together with the IMF and the
European Central Bank forms the Troika that prepared the
bailouts of Greece, Ireland, Portugal, Spain and Cyprus - said
tackling a restructuring in 2010 would have been wrong.
"The (IMF) report argues that an upfront debt restructuring
in 2010 would have been desirable. We fundamentally disagree,"
Commission spokesman Simon O'Connor told a news briefing.
"The report ignores the interconnected nature of the euro
area member states. Private debt restructuring would have
certainly risked systemic contagion at that stage," he said.
"It would have also severely undermined the programme. This
was the unanimous position of the member states of the euro area
and, indeed, of the Troika partners at the launch of the
programme," O'Connor said.
The IMF published its view in an assessment of the Greek
bailout late on Wednesday, also admitting it lowered its normal
standards for debt sustainability to take part in the 110
billion euro bailout and that its projections for the Greek
economy had been overly optimistic.
"An upfront debt restructuring would have been better for
Greece although this was not acceptable to the euro partners,"
the IMF report said on Wednesday.
"A delayed debt restructuring also provided a window for
private creditors to reduce exposures and shift debt into
official hands. As seen earlier, this shift occurred on a
significant scale and limited the bail-in of creditors when PSI
(losses for private bondholders) eventually took place, leaving
taxpayers and the official sector on the hook," the IMF said.
Greece restructured privately held Greek bonds in 2012 to
reduce its debt burden, imposing losses of more than 70 percent
on investors after the country's recession turned out to be
longer and deeper than anticipated and reforms were delayed.
Asked about the prospects for future cooperation with the
IMF after the criticism in the report, O'Connor said the report
was prepared by IMF staff, and not endorsed by the fund's board.
"Clearly the Troika is something that did not exist three
years ago. It's been a learning process, we are dealing with
extremely complex, challenging and difficult issues, with
tremendous pressure on many sides," he said.
"We have different traditions, different approaches to many
issues, we have always managed to come to sound and constructive
solutions and a way forward. I would not jump to any conclusions
if there should be any changes to the way we work together on
the basis of this report."