The International Monetary Fund has approved new lending rules to help resolve sovereign debt crises without having to resort to the large bailout loans made to Greece, Ireland, and Portugal.

The reforms include the elimination of the “systemic exemption” that was introduced in 2010 to loan 30 billion euros to Greece. At the time, the IMF feared a debt restructuring would spark a financial firestorm that would spread throughout the eurozone.

Under the new rules, the fund now has another option when a member country’s bailout needs exceed the fund’s normal borrowing levels.

“If debt might overwhelm the economy but a sovereign-bond restructuring risks financial contagion, the IMF can bail out a country if bondholders agree to extend maturities on securities,” the Wall Street Journal explained. “Unlike the half-century maturity extensions Europe is currently considering for Greece, such a re-profiling would only cover the period a country is in a bailout program.”

Although a re-profiling is still a form of debt restructuring, the IMF said in a news release, “in these circumstances, it will likely be less costly to the debtor, the creditors, and the system than a definitive debt restructuring.”

The IMF said it would also consider lending to a country without a debt restructuring or re-profiling if other official creditors were to cover some of the emergency financing needs. Those creditors, such as in the current case with the eurozone and Greece, would have to assure the fund they are willing to restructure the debt if needed.

“If official creditors were unwilling to provide such assurances, the terms of the financing would need to be sufficiently generous upfront to restore debt sustainability with high probability,” the IMF said.

After the Greek bailout, the systemic exemption was invoked for loans to Ireland and Portugal and has been used dozens of time since.

The aim of the reforms “is to get a debtor country back on its feet more quickly while instilling confidence in the loan program,” Reuters said. “If private creditors are simply paid off with IMF money, there is less incentive for a country to pursue reforms needed to improve its debt profile.”

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