The International Monetary Fund has warned that austerity programs in Europe’s most troubled economies could have political limits, as resistance grows in Greece and Portugal over their bailout terms.
In a briefing made for the November 4-5 meeting of G20 leading economies in Mexico and released Thursday in Washington, the IMF said that financial conditions in the eurozone «remain fragile» and there are risks that countries asking for support will be unable to fulfill adjustment demands made on them.
It said that troubled countries may be prevented by «political economy factors» from moving in a timely fashion to request needed support from the European Stability Mechanism and the European Central Bank’s new OMT bond-buying support operations.
“Another risk is that austerity may become politically and socially untenable in periphery countries, as structural and fiscal reforms will still take years to complete,» the IMF report said.
The IMF said that recent policy actions, like the OMT program and the launch of the ESM, had eased some financial stress in the eurozone.
“Financial markets have experienced welcome respite recently and there are signs that the pace of activity has picked up relative to the second quarter,» it said in the briefing for Group of 20 finance ministers.
“Nonetheless, the global economy remains vulnerable to new setbacks,» it said, mentioning political battles over fiscal adjustment in the United States and Japan.
“While downside risks may have diminished somewhat lately, they still appear much higher than half a year ago, it said.
In Europe, it said, if financial stress surges again, pressure would mount on governments to expand austerity operations to keep their budgets under control, «resulting in larger GDP losses and significant spillovers on other economies.”
The warning came as Greece in particular seeks an easing of the targets of its austerity program and its debt terms to reverse a deep recession. (AFP via ekathimerini. see also directly IMF report)
PS IMF= our friend and protector lol
The IMF / EEC do not give a shit about the people, it’s all money money money to protect their own finances, they have no social conscience and should hang their heads in shame
How could they feel shame when they have no conscience?
But you are right: the IMF does not have a conscience. It was not designed to have one. For that they formed the World Bank. And one of the problems with the European Economic Community was exactly that: it was just an economic community and ‘social’ did not come into it. That’s why it became the European Union in which democratically chosen governments still have the right of veto for an awful lot of things. But those representatives of the European people are not willing to use that for the benefit of the Greek people. Heck, not even the Greek government is willing to veto for it’s own people.
Don’t know if you are from an EU-country. But if so, you and I are to blame by letting them and facilitating them by voting for them. So we should hang our heads in shame.
The problem with austerity is that it hurts the most vulnerable and the rich are (as always) protected by the politicians that they have bought (think Lagarde list.) I know folks hate the idea of taxes paying for political campaigns, but if politicians are funded only through public funds and have to do a full disclosure of all monies and gifts received by themselves and their families, they tend to be more responsive to the general population.
The problem of the most vulnerable getting hit is not just a problem caused by austerity. It is a problem caused by the make-up of society. There was a Greek economist from Thessaloniki on Irish radio claiming things are not half as bad as they are mad out to be because people are not on the streets on rags. And the tight family links and friendships keep people going. What this guy is really saying is that is what quite ok to rob the social security funds, health care systems etc because have not’s still have family and friends. So family ties and friendships have now very effectively been taxed at an extortionate rate. If only they would apply those same rates to those with friends in high places…
Society is the problem, austerity is a symptom of how rotten society is
So true.