Greece is a case for the poverty-solving World Bank, not the IMF says ex-minister

Greece's financial crisis is so severe that it should turn to the World Bank for help rather than the International Monetary Fund, its former finance minister has claimed.

George Papaconstantinou, who was finance minister from 2009 to 2011, said Greece’s finances were so weak and its institutions so immature that it needed support of the type that the World Bank offers to the least developed countries.

As well as receiving bail-outs, Greece has been under orders to reform its economy and improve its tax collection system, but it simply lacks the ability, Mr Papaconstantinou said: “I know it is not politically correct to say so but Greece was more of a World Bank case than an IMF case. It needed serious support for institutional reform. Not just the task force that came to help us, not just the very good technical assistance from the IMF, but much more long-term, deep institutional reform to be able to implement this.”

The World Bank was set up to rebuild war-ravaged countries of Europe after the Second World War and now seeks to help the very poorest nations.

By contrast the IMF more typically deals with relatively short-term financial crises.

“It took the Troika [the European Commission, the ECB and the IMF] a very long time to realise the lack of implementation capacity in a country like Greece,” Mr Papaconstantinou said.

Speaking at the London School of Economics, he said there was also a lack of political will, where parties are elected on a platform of opposition to reforms, and have to show they are only acting under eurozone and IMF pressure. As a result Greece suffers from extreme political cynicism.

Greece urgently needs “institution building which extends from the judiciary to public administration, transparency, to civil participation. We have extremely weak institutions and therefore a very low level of trust between the state and its citizens,” he said.