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IMF Calls on Eurozone to Take Determined Action in Response to Crisis

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Fiscal Rules and the Sovereign Default Premium

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ΔΝΤ:

Crises can take many different forms:

Economic crises can be characterized by severe balance of payment problems, which often lead to pressure on the currency, a large decline in consumer demand and investment

by firms, higher unemployment, and lower incomes. Crises are often accompanied by heightened uncertainty in financial markets and declines in the prices of stocks, bonds and, quite frequently, the value of the domestic currency.

Financial crises can originate in or affect the financial sector, and can be accompanied by heightened uncertainty in financial markets, leading to declines in the prices of stocks and bonds. They can lead to difficulties in banks and the payments system, causing damage to the real sector and to economic activity more generally.

How IMF lending helps

IMF lending aims to give countries breathing room to implement adjustment policies and reforms that will restore conditions for strong and sustainable growth, employment, and social investment. These policies will vary depending upon the country’s circumstances.For instance, a country facing a sudden drop in the price of a key export may simply need financial assistance to tide it over until prices recover, and to help ease the pain of an otherwise sudden and sharp adjustment. A country suffering from sudden or rapid capital outflows needs to address the problems that led to the loss of investor confidence. Perhaps interest rates are too low, the budget deficit and debt stock are growing too fast, or the banking system is inefficient or poorly regulated.

The IMF has also strengthened its ability to prevent crises by introducing the Flexible Credit Line(FCL) and the Precautionary and Liquidity Line (PLL), and through greater use of High Access Precautionary Stand-By Arrangements (HAPAs), amongst other measures.

To meet member countries’ urgent balance of payment needs, the IMF has introduced the non-concessional Rapid Financing Instrument (RFI). In addition, for low-income countries, the Rapid Credit Facility (RCF) was created under the Poverty Reduction and Growth Trust (PRGT).

IMF Conditionality

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Conditionality helps countries solve balance of payments problems without resorting to measures that are harmful to national or international prosperity….!!!!!! ΚΑΜΙΑ ΣΧΕΣΗ !

ΠΠ

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