IMF’s criminal neglect on Greece
Critical talks between Greece, Europe and the IMF are on the verge of breakdown.
I understand the IMF is insisting Greece abolishes a tax allowance aimed at the poorest people, and wants instead a lower tax free allowance to apply to all Greeks, effectively redistributing money upwards.
At present the Greek system allows people to earn 2100 euros tax free, but the allowance tapers off for peoplewho earn above 21k, and disappears if you earn 40k.
The IMF, in backroom discussions this week has demanded the allowance be simultaneoulsy reduced to 1800 euros and applied to all Greeks, even the better off. The finance ministry calculates this is a 300m euro handout to the rich.
It is yet another example of the magical thinking that guides IMF officials when they are not making heart-rending speeches to world forums about the need to help the poor.
In the real back rooms, of the real crisis, when it comes to the real poor the IMF’s real policy is redistribution to the rich.
The tax allowance spat is just one sticking point in a wider dispute that sees the IMF refusing to sign off a deficit reduction plan Greece has agreed with its European lenders.
Logically Greece should simply agree the terms of a new bailout with the EU and Eurozone only, but German government cannot sell that to its parliament without IMF involvement.
As a result Greece, which accepted massive further austerity as the price of an emergency rescue last July, still has no bailout agreement. The Greek finance ministry said:
“We are surprised, once again, with IMF’s stance. This time, the claims of the institution’s representatives go beyond what the world generally understands as economic theory.”
“It is obvious that IMF, as the ‘traditional supporter’ of the world’s poor, is not negotiating as seriously as it should.”
The deadlock matters because Greece is under increasing strain due to the refugee crisis. The Troika’s tactic of simply delaying decisions, letting the social pain and political tension rise, looks — in the context of the refugee influx and renewed geopolitical instability — like criminal neglect.
