At least now, Athens probably won’t quite get to the point of having to fend off rumours that it’s about to go cap in hand to the IMF. Unlike, say, its old enemy in Ankara. As Reuters reported on Wednesday:
Turkey and the IMF are not currently holding talks on a stand-by loan agreement, Turkey’s economy minister said on Wednesday, confirming earlier comments from an IMF spokeswoman that talks were no longer taking place.
Ali Babacan said Turkey and the IMF were not holding talks from now until May, but left the door open for a possible agreement in the future, saying the government would decide then on how to proceed with the IMF.
… Which also provides a reality-check on the argument – still flying around even now, and even among analysts at Fitch – that the best solution to Greece’s problem remains the good old no-nonsense IMF. Hardly. States avoid the Fund like the plague, with very good reason.
It’s not just the obvious drawbacks of watching your country tank in the markets, while enduring the severe economic pain of adjusting to the conditionality measures imposed by the Fund on your loan.
Sometimes that loan doesn’t even work – Argentina’s default in 2001 came despite prior cooperation with the IMF. Nor is IMF-sponsored fiscal adjustment always that up to snuff. A European official alleges in this post by the Economist’s Charlemagne that the IMF effectively cut and pasted Latvia’s recent programme, with little customisation for its particular problems.
All of which goes to help explain some of this week’s agitation for a European Monetary Fund – if not justify it; while Greece could well have dodged a bullet. Although, to be fair, it has already dodged a veritable hail of machine-gun fire in recent weeks.
Related links:
EU-IMF breakdown over Latvia? – FT Alphaville
Turkey’s IMF financing talks end – FT
IMF signals its support is possible for EMF -FT
Greece prepared to turn to IMF – FT