Poor and misleading information complicated bailout design - ECBFriday 10 January 2014 18.58
Incomplete or even misleading information hampered the European Central Bank's ability to give advice on bailout programmes for the euro zone countries receiving international aid, the ECB said today.
Greece had to request aid in 2010 as it could not finance its debt load in the markets any more.
Later, Ireland, Portugal and Cyprus also received a full aid package.
"In some cases, the information set was incomplete and in particular in one country, even misleading at the start of the programme," the ECB said in its answers to European Parliament questions, published on its internet site.
"The ECB’s input into the troika advice was provided on the basis of the information available at the time," it added.
It did not name the country providing misleading information. The troika is the name given to the ECB, European Commission and International Monetary Fund in their bailout roles.
The ECB also said that the staff of the three institutions co-operated "in a very good and fruitful manner".
The IMF said in June that it lowered its normal standards for debt sustainability to bail out Greece and its projections for the Greek economy may have been overly optimistic.
The ECB also fended off suggestions that it had been inflexible in its advice, saying it continuously reviewed the economic analysis on which the programmes were based as new data came in.
"In several instances (e.g. Greece and Portugal), targets were significantly reviewed, or even parts of the programme redesigned," the central bank said, adding that it had taken into account fair distribution of the adjustment costs.
While the countries receiving international aid had made significant progress, they should not let up their efforts to balance their budgets and economic structure.
"Fiscal consolidation will need to continue to correct the excessive fiscal imbalances and reign in adverse debt dynamics," the ECB said.
"Further back loading fiscal consolidation efforts is likely to undermine the credibility of the fiscal strategy - with adverse effects for sovereign spreads and/or prospects for regaining market access," it added.