Should IMF loans carry a stigma?
In response to the global financial shocks over the past decade and a half, the International Monetary Fund has unveiled a sometimes dizzying array of funding lines available to its members. For those keeping score, please note that the old Precautionary Credit Line has now been replaced by the Precautionary and Liquidity Line. The IMF ...
In response to the global financial shocks over the past decade and a half, the International Monetary Fund has unveiled a sometimes dizzying array of funding lines available to its members. For those keeping score, please note that the old Precautionary Credit Line has now been replaced by the Precautionary and Liquidity Line. The IMF is concerned that while the original line was quite helpful to those who availed themselves of it, very few countries did. Why? In part, several Fund officials contend, because of image problems that come with negotiating a special IMF credit line:
In response to the global financial shocks over the past decade and a half, the International Monetary Fund has unveiled a sometimes dizzying array of funding lines available to its members. For those keeping score, please note that the old Precautionary Credit Line has now been replaced by the Precautionary and Liquidity Line. The IMF is concerned that while the original line was quite helpful to those who availed themselves of it, very few countries did. Why? In part, several Fund officials contend, because of image problems that come with negotiating a special IMF credit line:
Despite these benefits, demand for the Flexible Credit Line and the Precautionary Credit Line remained limited for a number of reasons. Most countries continue to prefer self-insurance, for instance by building up their foreign reserves, and there are continuing concerns about the stigma of approaching the IMF for financial assistance.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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