EU Lawmakers Question Credibility of Troika’s Economic ForecastsIan Wishart
European Union lawmakers called for euro-area bailout inspectors to improve their economic forecasting as they questioned whether the debt crisis could have been handled better.
The so-called troika, comprising representatives of the European Commission, the European Central Bank and the International Monetary Fund, which shapes the conditions imposed on euro-area countries receiving emergency aid, came up with poorly designed bailout programs because of inaccurate predictions, members of the European Parliament said today.
“If I look at the assumptions on which their policies have been based, most of their forecasts have consistently been wrong,” Derk Jan Eppink, a European lawmaker from Belgium, told a hearing in Brussels today. He said predictions about Greece’s growth prospects and debt levels in 2012 were particularly wide of the mark.
The questioning of the economic forecasts is part of an inquiry being conducted by members of the 28-nation legislature into how successful the troika has been in improving the economies of countries receiving international aid.
“We may fail, we aren’t perfect, errors can be made,” said Servaas Deroose, a commission economist who, as part of the troika, helped negotiate Greece’s second bailout of 130 billion euros ($175 billion) in 2012. “However, we have made a lot of analysis on the accuracy of our forecasts and there I can stress that the commission forecasts have a very good track record.”
The ECB’s Klaus Masuch, who was also involved in the negotiations in 2012, told the hearing that “especially on the Greek macroeconomic forecasts” there was room for improvement.
“We know that the information set in Greece which underpinned the forecasts which we made in April, May 2010 and which underpinned the design of the first economic adjustment program, was very incomplete and even included incorrect and misleading statistics,” Masuch said.