Greece’s bailout gave too little regard for the impact on people and economic growth, a report for the eurozone rescue fund said Thursday.
The report by former European Commissioner JoaquínAlmunia scrutinized the fund’s assistance programs that staved off Grexit but forced the government to slash spending and focus on repaying debt.
“The programmes provided Greece with emergency funding, avoiding a forced exit from the single currency,” said the report, commissioned and published by the fund after being independently drafted by Almunia. “There was, however, insufficient attention to the underlying social needs of the Greek population.”
Five recommendations accompanied the 167-page report, including a call for future programs of the European Stability Mechanism to focus more on letting the economy rebound in the long run. The ESM, government by a board of the euro-area finance ministers, is not bound by the recommendations.
“The ESM programme failed to systematically and vigorously pursue the objective of longer-term macroeconomic sustainability and resilience,” which is key to the credibilty of any bailout, it said.
Political discord among ministers on the board “hampered the institution’s ability” to tailor policies to Greece, the report said.
Greece witnessed a sharp drop in private investment and a “significant rise” in unemployment plus a brain-drain. Still, the report said it was “plausible that these consequences would have been worse in the absence of the assistance programme.”
The Hellenic banking industry is now stable but remains weak with thin capital buffers and bad loans still clogging lenders’ balance books, according to the report.