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The Politics of IMF LendingIMF Lending and the Crisis in Europe

The Politics of IMF Lending: IMF Lending and the Crisis in Europe [In the aftermath of the global financial crisis, rich European economies were forced to borrow from the IMF for the first time since the United Kingdom’s 1976 program. Many had assumed that these countries would never need IMF help; none had defaulted since the Second World War and all have been democracies since the mid-1970s. Iceland was the first rich European country to run into problems. It was forced to borrow 1.4 billion SDRs in November 2008. In 2009, the crisis spread to Greece, which borrowed 26.4 billion SDRs in May 2010 and another 23.7 in March 2012.1 Loans far exceeding normal limits were also agreed with Ireland (19.4 billion SDRs) and Portugal (23.7 billion SDRs). In 2011, the European sovereign debt crisis entered a new phase when Spain and Italy were drawn into the conflagration. In July, the yield on ten-year Spanish bonds was 7.6 per cent and the yield on ten-year Italian bonds was 6.6 per cent. The European Central Bank (ECB) intervened aggressively in the bond market to prevent the collapse of the European banking system and euro currency.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

The Politics of IMF LendingIMF Lending and the Crisis in Europe

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Publisher
Palgrave Macmillan UK
Copyright
© Palgrave Macmillan, a division of Macmillan Publishers Limited 2013
ISBN
978-1-349-44277-5
Pages
105 –122
DOI
10.1057/9781137263810_7
Publisher site
See Chapter on Publisher Site

Abstract

[In the aftermath of the global financial crisis, rich European economies were forced to borrow from the IMF for the first time since the United Kingdom’s 1976 program. Many had assumed that these countries would never need IMF help; none had defaulted since the Second World War and all have been democracies since the mid-1970s. Iceland was the first rich European country to run into problems. It was forced to borrow 1.4 billion SDRs in November 2008. In 2009, the crisis spread to Greece, which borrowed 26.4 billion SDRs in May 2010 and another 23.7 in March 2012.1 Loans far exceeding normal limits were also agreed with Ireland (19.4 billion SDRs) and Portugal (23.7 billion SDRs). In 2011, the European sovereign debt crisis entered a new phase when Spain and Italy were drawn into the conflagration. In July, the yield on ten-year Spanish bonds was 7.6 per cent and the yield on ten-year Italian bonds was 6.6 per cent. The European Central Bank (ECB) intervened aggressively in the bond market to prevent the collapse of the European banking system and euro currency.]

Published: Oct 12, 2015

Keywords: European Central Bank; Domestic Politics; North Atlantic Treaty Organization; European Economic Area; Debt Restructuring

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