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Greece bailout planners failed to anticipate recession, say EU auditors

Massive bailout programmes for Greece were not properly planned and failed to anticipate the recessionary effect of austerity measures, auditors from the European Union's executive Commission said.

A report published Thursday by the EU's European Court of Auditors criticised the first and second Greek bailouts, which were backed by the International Monetary Fund and launched in 2010 and 2012.

Greece is nearing the end of its third consecutive bailout programme next year, following years of gruelling austerity measures that are set to continue until 2020.

Greece now has a national debt touching 180% of its gross domestic product and unemployment higher than 20%.

"Despite a growing number of conditions, the first and second (bailout) programmes did not adequately prioritise their relative importance and they were not embedded in a broader strategy for the country," the report said.

Creditors initially estimated that Greece would return to growth in 2012, the report noted.

Instead, the country lost more than a quarter of its economic output and has only emerged from a long period of stagnation this year.

In 2013, the IMF also admitted it made unrealistic assumptions about the Greek economy, failing to forecast the extent of the country's crippling recession.

A study published Thursday by the Federation of Greek Enterprises found that some 360,000 Greeks - just over a third of the jobless total - have been unemployed for more than four years.

As the country's left-wing government prepares to end Greece's third bailout in August 2018, finance minister Euclid Tsakalotos announced this week the next pre-exit bond issue would not take place until next year, following a successful three billion euro (£2.7 billion) bond sale of five-year notes in July.

This week, Greece's Public Debt Management Agency launched a bond swap worth nearly 30 billion euro (£27 billion) in a process that ends on November 28.

AP

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