Sunday, 22 June 2014 - 20:04
After eurozone crisis, IMF rethinks rescues
The International Monetary Fund is rethinking bailouts in the wake of the eurozone crisis, with an eye to giving governments near default better options to stabilise their finances.
To date the world's crisis lender has had two choices to help out a country struggling to pay its debts: offer funds to keep it afloat while it adjusts policy, or, if the crisis is too deep, first require its creditors to write off some of the debt.
But the eurozone crisis showed that that was too inflexible, given the difficulty of assessing what is needed to ensure debt "sustainability" -- when a country can continue to service its debt while making necessary governance adjustments and reforms.