The report states that the IMF has learned, through its involvement with the Eurozone and Greece “the problems which characterize those programs which are supported by the Fund when the viability of the debt has not been already secured”.
The report states that the Greek debt was not cut due to fears that the subsequent crisis would then spread to the rest of the Eurozone as there were no firewalls to protect them from such an occurrence. The principle of “systemic exclusion” was added in order to avoid the constitutional demand of the Fund that it can only deal with a viable/sustainable debt.
“When the re-structuring of the debt came, this came very late and it was too little. When the haircut of the private debt was decided (PSI), this was quite large for the creditors compared to other cases, but at the same time, the possibility that it would not be sufficient had also risen”.
Concerning the two programs which were followed; in 2010 when Papandreou was PM, and in 2012 when Papademos was the prime minister, the IMF states that an internal de-valuation was aimed at through reforms in the services and goods markets.
For that reason it was decided that wages in the public sector would be cut, the law concerning union negotiations would change, large privatizations would take place, and beaurocracy would be eliminated in order to support competitiveness.