Just as Portugal is assailed by the collapse of a bank propped up in the aftermath of the troika bailout, the IMF has admitted that it should never have lent the country so much money in the first place.
A study published yesterday (Thursday) has shown that the institution effectively shut its eyes (and hoped) as it was well aware of Portugal showed “latent problems of debt sustainability”.
The report adds that the IMF’s “doubts” were reaffirmed in June last year, when Portugal had “barely” celebrated its so-called “clean exit” from the adjustment programme.
As to the reasons for bailing out a country where the debt ratio has now increased from 97% to 130%, the study, reported in Diário Económico, explains that the IMF “at the time” was giving bailouts to countries that did not satisfy general rules because to do otherwise would “generate relevant systemic dangers and contagions on a global scale”.
DE adds that “the worst part” of this story is that the IMF remains “with doubts over whether countries will be able to pay back what they owe”.
“Portugal had access to 26 billion euros, and has begun to repay this amount. But there is still 20.7 billion owing”, says DE.
Other countries in the same financial ‘dinghy-losing-air’ are Armenia, Bosnia Herzegovina, Greece, Iceland, Ireland, Lithuania, the Maldives, Portugal and Romania, added the IMF report, which, not surprisingly, concludes it is now “learning” from the mistakes of insistent policies of austerity, as all they appear to have done is increase debt levels to the point of no return.
The official version reads: “Some countries that implemented enormous budgetary consolidation experienced considerable declines in activity, reflecting larger budgetary multiplicators than originally anticipated, as well as reversals in GDP faced with artificially inflated levels and weaker activity associated with weak global demand, political uncertainty and the incomplete implementation of reforms”.