24 Mar 2010

Greece and the IMF

Daniel Gros

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The stand-off among the members of the eurozone over whether to come to the aid of fellow member Greece has prompted a lot of speculation that Greece might turn to the IMF for support, an approach that now seems to be favoured by the German government. This Commentary by CEPS Director Daniel Gros finds, however, that while the IMF may have fewer political constraints in giving cheap money, it is unable to provide enough to make a lasting difference to Greece. Against modest gains, he asks in what position would Greece be if it went to Washington now and then had to come back to its EU partners later in the year? Gros acknowledges, however, that a loan from the IMF might serve the purpose of providing the EU with a convenient smoke screen to temporarily obscure the fundamental differences among the members on how the euro area should be run.