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Reform of the IMF lending framework: The IMF bails out from bailouts

Bodo Ellmers

02 Feb 2016 10:40:28

The International Monetary Fund (IMF) has approved a new reform of its exceptional access framework. The key step made on 29 January 2016 is to remove the systemic exemption clause. This is the clause that has made IMF participation in the mega bailout of private creditors in Greece possible. It created the situation that Greece is now indebted mainly to official creditors, while banks and other creditors have recovered most of their money. However, the reform is no guarantee that publicly funded bailouts will no longer happen. It just transfers the task from the IMF to other official creditors, in Europe to the European Stability Mechanism (ESM). The huge Troika-funded bailout of Greece’s private creditors caused a lot of outrage: European citizens complained that they were being held ...