WASHINGTON (AFP) – Pilloried by the new Greek authorities, the “troika” of creditors – the International Monetary Fund, European Union and European Central Bank – was formed in 2010 to rescue debt-riddled Greece.
Since then, the three have become a widely disdained symbol of painful austerity in the eurozone country under the bite of the lenders’ program of radical budget cuts and economic reforms imposed in exchange for their financial aid.
In May 2010, despite strong resistance in Brussels, the IMF, the EU and the ECB for the first time pooled efforts and resources to mount a bailout, which has grown to a commitment of 240 billion euros ($271 billion), to help Greece survive crushing debts and avoid its exit from the eurozone.
Derived from a Russian word meaning “group of three”, the troika since engineered massive rescues elsewhere in the eurozone, in 2010 in Ireland ($85 billion euros) and in 2011 in Portugal ($78 billion), and continues to oversee a much smaller programme of $10 billon for Cyprus, launched in March 2013.
The troika does not exist formally but its teams in principle meet every three months in the rescued countries to verify that the authorities are abiding by the prescribed reforms aimed at reviving public finances.
These audits often give rise to epic negotiations, notably with Athens, as their outcomes are key to the release of loan installments.
The roles within the troika have never been clearly defined but the IMF, an experienced hand in managing aid programs, has often been presented as the guarantor of a strict application of austerity cures compared with the relatively inexperienced Europeans.
Throughout its tumultuous existence, the troika has been fraught with internal tensions, seeming inevitable between a central bank (ECB), a global lender (IMF) and a political-monetary union (EU).
For Greece, for example, the IMF has repeatedly urged its European partners to do more to back-stop the country’s debt, considered unsustainable by the Washington-based institution.
Pushback from recipient countries also has flared. Cyprus rejected the troika’s first version of its bailout plan that required the country to levy a controversial tax on all savings accounts.
The troika’s scorecard is the subject of debate: Ireland, Portugal and Greece have revived economic growth but at the price of high unemployment and cuts in social spending that have incited numerous protests.