Ashoka Mody, Columnist

The IMF's Big Greek Mistake

Greece should have shed its debts five years ago. The IMF can fix that now.

April 21, 2015 at 2:14 PM UTC

Ashoka Mody is a visiting professor in international economic policy at Princeton University. Previously, he was a deputy director at the International Monetary Fund's research and European departments. He is the author of "EuroTragedy: A Drama in Nine Acts."

It takes money to rebuild.
Photographer: Kostas Tsironis / Bloomberg

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The Greek government's mounting financial woes are leading it to contemplate the unthinkable: defaulting on a loan from the International Monetary Fund. Instead of demanding repayment and further austerity, the IMF should recognize its responsibility for the country's predicament and forgive much of the debt.

Greece's onerous obligations to the IMF, the European Central Bank and European governments can be traced back to April 2010, when they made a fateful mistake. Instead of allowing Greece to default on its insurmountable debts to private creditors, they chose to lend it the money to pay in full.