Arab Today, arab today imf reforms lending rules to heavily indebted countries
Last Updated : GMT 04:18:33
Arab Today, arab today
Arab Today, arab today

IMF reforms lending rules to heavily indebted countries

Arab Today, arab today

Arab Today, arab today IMF reforms lending rules to heavily indebted countries

Last week, the IMF abandoned the "systemic exemption" rule
Washington - AFP

The International Monetary Fund said Friday it had overhauled its lending rules for heavily indebted countries, including a rule created in 2010 to allow it to aid Greece.

Last week, the IMF abandoned the "systemic exemption" rule which it used to justify giving Greece a massive bailout despite doubts about the sustainability of the country's sovereign debt.

At the time, the crisis lender decided that a Greek debt restructuring could pose severe negative spillovers on the rest of the eurozone, thus the need for the exemption.

In a report published Friday, the IMF acknowledged that this controversial rule "did not prove reliable in mitigating contagion" and posed "substantial" costs and risks for the IMF and member countries.

In addition, it could encourage creditors to overlend to a country on easier terms because they believe the country would likely receive a public bailout in a crisis, it said.

The measure had stirred criticism, notably from some emerging-market countries that saw it as giving favorable treatment to European states, but it was also under fire from US Republican lawmakers who called for its end.

The new rules drop that exemption and focus on a "gray" zone in which a country's debt has not been deemed sustainable with "high probability" -- one of the IMF's core lending rules -- and restructuring of its sovereign debt is considered too risky.

In this case, the IMF can offer financing on the condition that the country receives in parallel, from public or private creditors, sufficient funds to allow it to return to debt sustainability and ensure the crisis lender will be repaid.

The new policy does not "automatically presume" a restructuring of sovereign debt at the outset of aid when debt is in the gray zone.

If the country loses access to financial markets, a "reprofiling" of debt would typically be appropriate and would give the country more breathing room in adjusting to conditions of the IMF loan.

In cases where debt restructuring would be too risky for financial stability, the IMF could lend under the condition that other public creditors ease their conditions for repayment.

This last measure reflects the current negotiations on the European Union's third bailout for Greece, under which the IMF will only participate financially if the Europeans ease Greece's debt burden.

Some member states of the 28-nation EU have rejected that option, arguing that European treaties prevent them from erasing debt.

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf reforms lending rules to heavily indebted countries Arab Today, arab today imf reforms lending rules to heavily indebted countries

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf reforms lending rules to heavily indebted countries Arab Today, arab today imf reforms lending rules to heavily indebted countries

 



Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Mozambique's gas boom dream under threat

GMT 16:29 2017 Monday ,08 May

Mozambique's gas boom dream under threat
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Jaguar displays XF Sportbrake line

GMT 14:36 2017 Monday ,08 May

Jaguar displays XF Sportbrake line
Arab Today, arab today BMW sees forecasts in reach

GMT 09:04 2017 Thursday ,04 May

BMW sees forecasts in reach
Arab Today, arab today Climate science: Bad news gets worse

GMT 08:48 2017 Saturday ,06 May

Climate science: Bad news gets worse
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday