Monday, July 15, 2024

Why does Greece insist on limited involvement of the IMF?

Greece’s clear reluctance to agree to further involvement of the International Monetary Fund (IMF) in its financial aid has added to the increasingly loud voices of criticism targeted at the Fund.

The IMF has in the past been harshly condemned of its failure to provide working solutions within the context of the specific economic problems it aims to address. The Fund’s strict loan conditions which countries must meet to obtain assistance are considered exploitative and have earned it the unenviable tag of a self-interested loan shark. Greece’s decision to reject the Fund plays into Africa’s narrative that the IMF’s loans have destroyed the richly endowed continent. The narrative argues that the development structure of the Fund is such that Africa exports its natural resources, growth opportunities and jobs and in turn imports poverty, economic regression and vicious debt, all of which happens due to the control the Fund gains, masked as financial relief.

According to a United Kingdom daily newspaper, The Telegraph, the Greeks owe the fund 450 million Euros which is due in August. Greece rejected the Fund’s involvement in a third bail out, which The Telegraph suspects is because of the Fund’s determination to extract structural reforms from the country. The rejection suggests that Greece does not have confidence in the Fund’s ability to reverse its financial woes. Its clear intent to accept limited IMF involvement, while at the same time requesting a new loan of 53.5 billion Euros over the next three years to avoid a financial breakdown, puts forward the idea that Greece does not believe that the bailout package of the Fund will serve as an appropriate tool to address its fragile crisis.

The reality is that Greece is wobbling in a financial meltdown, and the best approach to warding off its problems is to accept financial assistance that will enable it to engineer a positive economic growth path; at the same time allowing it space and time to pay back the money it owes its creditors. Former acting head of IMF’s Europe Division received Greece’s rejection of IMF’s further involvement with a bitter backlash on twitter, which reads “so Greece is against the involvement of the only institution that recognizes the country needs debt relief? The ways of the world.”

With an agreement reached by the Euro Summit to prevent the exit of Greece from the Euro zone, it could be said that the Greek worked hard to garner the support of its partner countries as doing so entailed re-building their trust in the economic reforms anticipated to relieve it of its financial woes. It might, in light of Greece’s action, be said that Africa could learn that an attempt in building strong intra relations can reduce its dependence on the Fund’s financial assistance, which more often than not comes with conditions that fall out of favour for a positive growth and development of the continent.


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