The Spanish government was trying to convince the world that it is beginning to recover, but the IMF was not buying it.
IMF head Christine Lagarde angered the authorities there when she instead insisted that the austerity drive must continue.
The scars of the crisis run deep and will take years to heal, Lagarde said. "There is no doubt that the reforms that I have outlined for Europe and for Spain will take several years of determined efforts by both government and society." The good news, she said, is that Spanish exports have risen faster than Germany's.
Insisting that the "strong reform momentum must be maintained", she called for a continued shakeup of the labour market and raising taxes.
She was quickly criticised by the European competition commissioner, who was also at the Global Form on Spain being held in Bilbao, for effectively calling for further wage cuts.
Spain has already pushed down wages. Last week the Bank of Spain insisted that since the crisis began wages have fallen twice as fast as the government claims they have.
Lagarde also singled out the high level of debt, calling on the government to reduce its deficit by raising VAT and income tax.
On the positive side, she urged Spain to cut through its bureaucracy for businesses, especially new ones. This, she said, will “lift their capacity to create employment”.
