Distancing itself from its own representative to the International Monetary Fund (IMF) who abstained from a vote on more aid for Greece after declaring the money would never be repaid, Brazil said the incident was all due to a misunderstanding it didn’t explain.
Late last month, Paulo Nogueira, who represents 11 countries at the IMF including his own, didn’t vote when the IMF okayed $2.3 billion in more rescue loans for Greece after he said it was “delusional” for anyone to expect it could be paid because of Greece’s crushing economic crisis.
He was swiftly recalled to his country to explain himself and disavowed by Finance Minister Guido Mantega who approved of the additional loan.
Mantega reaffirmed support for Nogueira while criticizing him and said his decision to abstain “resulted from miscommunication” but didn’t give any details on what that meant or whether it was a cover for a reprimand. “The Brazilian government favors the release of the Greek aid package,” Mantega added.
But he said he agreed with Nogueira that “the issue of rescuing Greece and other countries of the Eurozone periphery need to be revised and perfected to give those countries better recovery conditions”.
He added that, “Paulo Nogueira has, since his appointment in 2007, acted in harmony with the Brazilian government and has, as he always had, the political support of the finance minister and the government of Brazil in the Fund.”
Speaking in a personal capacity after last month’s vote, Nogueira, who holds a rotating post that also represents 10 small countries in Latin America, the Caribbean, Asia and Africa, said: “Recent developments in Greece confirm some of our worst fears.” He spoke of growing frustration among emerging countries with the IMF’s policy of bailing out indebted European countries, according to Brazilian press reports.
But Mantega said early this month that Nogueira “erred” by abstaining in the vote, adding that the official “neither consulted with nor received permission from the government.”
The latest loan disbursement means Greece has received around 8.24 billion euros ($10.94 billion) from the IMF under a bailout coordinated with the European Union and the European Central Bank in March 2012 even though internal IMF documents show doubt over Greece’s ability to repay and that there could be a $14 billion hole that needs to be plugged.
The IMF has also violated its own guidelines in continuing to give money to Greece which got into a crisis because of alternating administrations of New Democracy Conservatives and PASOK Socialists hiring hundreds of thousands of needless workers in return for votes. Despite that, the same two parties are in a coalition government led by Prime Minister and ND leader Antonis Samaras and charged with now firing scores of thousands of the workers they hired.
Greece was first bailed out for 110 billion euros ($147.05 billion) in 2010 but when that failed, got a second rescue worth 130 billion euros ($173. 8 billion) plus a private sector debt write-off totaling more than 100 billion euros ($133.7 billion) for a total combined package of $454.5 billion that has also failed to right the economy and left the government looking to impose big losses on the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up the money.