The massive financial rescue of Greece, with the country still struggling to meet its lenders’ conditions, is placing strains on relations between the IMF and its European partners in the bailouts.
Officially, the three providers of funds to Greece — the “troika” of the International Monetary Fund, the European Union, and the European Central Bank — are unified as they press Athens to stick to the growth-crunching austerity programme that came with their emergency loans.
But behind the scenes, the Greek problem is highlighting differences between the IMF and its European counterparts within the troika, according to officials and analysts.
The IMF, by its normal approach, wants mainly to help stabilise a country’s finances and get it on a positive fiscal path that would, at least, allow it to pay back the Fund’s loans.
But the EU and ECB see a bigger picture involving their own futures, particularly the survival of the Euro Zone.
“The fundamental difference between the IMF and the Europeans is that the IMF wants to be repaid while the Europeans are more focused on changes in Greece over the long-term,” said a European diplomat.
At the Fund’s Washington headquarters, some officials are annoyed over how much money has gone to bail out Greece, while the European Union has been slow to press reforms on its ailing members.
“There are different approaches which can generate tensions,” said one official who insisted on anonymity.
“The Fund is global and far away from the European context.”
Within the troika, “Too much importance was given to politics at the expense of economics” said Arvind Virmani, who represents India at the Fund.
The IMF has repeatedly told its European partners of the necessity of reducing Greece’s debt burden to put it on a sustainable path.