Business as usual: IMF protection of foreign creditors
The global financial crisis might have changed other aspects of IMF policy, but when it comes to the treatment of foreign and domestic creditors, it is business as usual. In the current issue ofGovernance, Aitor Erce of the Bank of Spain argues that after the crisis, the IMF insisted that member states honor their commitments to foreign creditors, while being less rigorous about government commitments to domestic creditors and suppliers. “The Fund,” says Erce, “continues to privilege foreign creditors at the expense of domestic creditors.” Moreover the Fund does not fully understand how its policy aggravates the risk of economic dislocation and continued recession. Read the article.