After five years of wrenching economic recession, one has to wonder what it will take for Greece to cut itself loose from the failed IMF and EU policies that have reduced the country to its present terrible economic pass. The Greek government has signed off yet again on an IMF-EU adjustment program that imposes upon Greece the very same recipe of severe fiscal austerity and structural adjustment—without the support of an exchange rate change to boost its external sector—that has previously failed so spectacularly to solve her economic woes.
In May 2010, when Greece signed on to its first IMF-EU program, it was assured by those organizations that the cost of austerity would be limited. It was also assured that the Greek government would be able to re-access the international capital market by 2012, if it followed the IMF prescription of draconian fiscal austerity and structural reform.
According to the IMF, any Greek recession would be short-lived and the country would be in recovery by the end of 2011. In the IMF’s assessment, there was absolutely no need for the Greek government to seek debt relief. And there was certainly no need for Greece to consider the possibility of reintroducing the drachma as a means to promote its external sector with a cheaper currency as an offset to severe budget tightening.
Read the full article on American.com.
Desmond Lachman is a resident fellow at AEI.