IMF lenient with Greece while strict with Asian and African countries

[Nahraf]

IMF pressuring Pakistan to raise VAT in Pakistan while has been too lenient with Greece.

"The International Monetary Fund's board will meet in mid-May to approve the next tranche of Pakistan's $11.3 billion loan but Islamabad must do more to tackle inflation and overcome power shortages that stifle the economy, the IMF said on Thursday."

FT.com / UK - Asia irked by IMF 'leniency' to Greece

Asia irked by IMF 'leniency' to Greece
By Kevin Brown in Singapore, Christian Oliver in Seoul,and Tim Johnston in Bangkok

Published: May 1 2010 03:00 | Last updated: May 1 2010 03:00

The International Monetary Fund's proposed bail-out for Greece is being criticised by Asian countries worried that Athens may be receiving an easier ride than Asian countries in the 1997 Asian financial crisis.

Senior South Korean officials said the austerity measures imposed in Asia had been more draconian than those expected to be presented to Greece. They suggested that the apparent leniency reflected the substantial voting power of European countries on the IMF board.

One official joked that the "European Monetary Fund is located on 19th Street," the IMF's address in Washington.

However, none of the IMF's five Asian voting members - China, Japan, India, South Korea and Thailand - seems ready to oppose the deal when it is presented to the 25-strong board. Korn Chatikavanij, the Thai finance minister, said: "We are not going to begrudge the IMF for doing a better job, from using the lessons learnt from the missteps in Asia."

The IMF was widely criticised during and after the Asian financial crisis for the severity of conditions attached to its $41.3bn bail-out programme for Thailand, Indonesia and South Korea, which included bank closures, big public spending cuts and higher interest rates.

Grumbles about European influence reflect lingering resentment about the voting power wielded on the IMF board by European countries.

Additional reporting by Mure Dickie, Geoff Dyer and James Lamont

 

[rubyjackass]

Nice comments from Thai minister. Nothing can be achieved by blaming IMF at least publicly.

 

[SinoIndusFriendship]

That's because the Thais were exploited by these Europeans (then and now), and IMF.

I feel compassion for them. A strong united Asia can withstand foreign exploitation.

 

[SHAMK9]

RACISM IN EUROPE

 

[Hyde]

Come on Greece............. you have killed me recently......... IMF please give them loan at 0% interest so that i can start recovering my money that i lost last month ...............

 

[Archie]

RACISM IN EUROPE

Have u ever noticed why the chairman of IMF is always a EUROPEAN
and that of WORLD BANK always an AMERICAN
While for the last decade or so UN SECRETARY GENERAL HAS BEEN FROM ASIA AND AFRICA .
I THINK IT SHOWS THAT AMERICAN AND EUROPEANS DO NOT CONSIDER UN CHIEF TO BE OF MUCH INFLUENCE EXCEPT SOFT TALKING AT TIMES OF A NATURAL DESASTER

 

[xenia]

Have u ever noticed why the chairman of IMF is always a EUROPEAN
and that of WORLD BANK always an AMERICAN
While for the last decade or so UN SECRETARY GENERAL HAS BEEN FROM ASIA AND AFRICA .
I THINK IT SHOWS THAT AMERICAN AND EUROPEANS DO NOT CONSIDER UN CHIEF TO BE OF MUCH INFLUENCE EXCEPT SOFT TALKING AT TIMES OF A NATURAL DESASTER

u think UN SG is made without uncle samz approval...in case of first UN chief trgyve lee US had threatened to veto every other name..thay are just pawns in their hands..

 

[macnurv]

Have u ever noticed why the chairman of IMF is always a EUROPEAN
and that of WORLD BANK always an AMERICAN
While for the last decade or so UN SECRETARY GENERAL HAS BEEN FROM ASIA AND AFRICA .
I THINK IT SHOWS THAT AMERICAN AND EUROPEANS DO NOT CONSIDER UN CHIEF TO BE OF MUCH INFLUENCE EXCEPT SOFT TALKING AT TIMES OF A NATURAL DESASTER

Well for that matter What about the Bilderberg Group or Tri-lateral Commission or Council on Foreign Affairs? Yes these elitists are racists and time and time again they have shown their concerned over the high birth rate in Asia and Africa. Any one remembers Ted Turners comments on population control?

IMF is the financial arm of these elites, their policies are designed to increase poverty not decrease it. Germany have been quite reluctant to Greek Bailout for obvious reasons. Estonia and Latvia are two European countries which have seen inflation shoot up along with jobless rates after the implementation of Cyclical policies recommended by IMF. Although conditions in Latvia are far worse then Estonia. Spain, Italy and Portugal will soon be where Greece is today a whooping 115% Debt of its total GDP. This was bound to happen when countries adopt over values currencies such as the Euro.
IMF have suggest cessation of all the social programs in Greece, after which the Greek youth is on the streets protesting against it.
What is happening in Greece is the trailer for the rest of continental Europe and the world in general.

 

[thinkingcap81]

IMF loan to Greece: unwarranted favour by Swaminathan S Anklesaria Aiyar

Few Indians are interested in Greece’s fiscal crisis, or the proposed IMF loan of 15-25 billion as part of a European rescue package. But Indians should worry. IMF resources raised for low and middle income countries are being diverted to bestow a special favour on a rich European country.
Greece’s problem is European, and should be tackled by its rich European brethren. It should not dip into limited IMF funds raised for poorer countries.
The global financial system was paralyzed in September 2008. All trade credit to India vanished. So did foreign loans to Indian corporates. Foreign institutional investors, who earlier poured billions into India, pulled out $9 billion in 2008. The situation was worse in other developing countries. The IMF’s lending capacity of $250 billion proved pathetic when trillions in global finance vanished.
So, in 2009 the G-20 agreed to triple the lending resources of IMF. Many developing countries contributed, including India, knowing they might need this in the next crisis. None dreamed that the expanded facility would be used to bail out rich members of the eurozone like Greece, Portugal or Spain.
Yet it is now clear that in a worstcase scenario, these countries will require the mother of all bail-outs. A JP Morgan economist has calculated that $750 billion might be needed by Greece, Portugal and Spain. Greece alone might require $150 billion, and might go bust even after that. Bond markets fear that Greek bondholders may lose 30% of their money.
Next in the firing line is Portugal. Its fiscal deficit is much smaller than Greece’s but it has a very large private sector debt. Also in the firing line is Spain, a big country of 47 million people. More distant but nevertheless in the line of fire is Italy, one of the biggest economies in the world.
This is a European problem, not an IMF problem. Why not? Because the IMF was created to deal only with balance of payments problems. The eurozone countries have fiscal problems (high government deficits), but no balance of payments problems. Eurozone countries have given up their individual central banks and currencies, and instead created the European Central Bank, which issues euros in place of old
domestic currencies. Banks of eurozone countries get euros without any hurdle from the European Central Bank. So, these countries have no balance of payments problems.
But many have fiscal problems. During the 2007-09 recession, all governments greatly expanded fiscal deficits as an anti-recession stimulus. But some European economies did not respond to the stimulus, and they now have huge fiscal deficits but no rapid growth that rebuilds government revenues. Once, government bonds of all eurozone countries were rated triple A. But Greece’s bonds have been downgraded to junk. Portuguese and Spanish bonds are under pressure, and even Italian bonds are exhibiting discomfort.
Now, the eurozone cannot afford to let Greece, Portugal or Spain go bust. The political and economic damage would be immense. European banks are the main holders of Greek, Portuguese and Spanish bonds, and a bond default by these countries would wreck the entire European financial system. So, European governments have agreed, reluctantly, to rescue Greece.
Why have they dragged the IMF into this European issue? First, rather than be tough on Greece themselves, rich Europeans find it convenient to leave the disciplining to the IMF. Second, they want the IMF to take up part of their financial burden. The IMF will lend at 3.5%, whereas the Europeans will lend to Greece at 5%, and this will provide the Europeans with an interest subsidy.
No such privilege would ever be extended to a developing country. Greece is getting a special deal because its fellow-Europeans dominate the IMF.
Poorer countries dare not stand up to Europe. But India can. It can raise a serious technical objection. The articles of association of IMF say it can lend only for balance of payment problems. And Greece has a fiscal problem, not a balance of payments one. Some economists say fiscal and balance of payments are related. True, but the distinction was nevertheless made when creating the IMF.
Absent the IMF, other eurozone countries will pick up the full rescue tab, out of sheer self-interest. They have more than enough financial muscle, and should not raid the limited coffers of the IMF.
If they need the IMF as a tough cop, let them use it as a technical consultant, not a lender. Tough cops have their uses the world over, but do not usually lend to those they are disciplining.

 

[Archie]

Well for that matter What about the Bilderberg Group or Tri-lateral Commission or Council on Foreign Affairs? Yes these elitists are racists and time and time again they have shown their concerned over the high birth rate in Asia and Africa. Any one remembers Ted Turners comments on population control?

IMF is the financial arm of these elites, their policies are designed to increase poverty not decrease it. Germany have been quite reluctant to Greek Bailout for obvious reasons. Estonia and Latvia are two European countries which have seen inflation shoot up along with jobless rates after the implementation of Cyclical policies recommended by IMF. Although conditions in Latvia are far worse then Estonia. Spain, Italy and Portugal will soon be where Greece is today a whooping 115% Debt of its total GDP. This was bound to happen when countries adopt over values currencies such as the Euro.
IMF have suggest cessation of all the social programs in Greece, after which the Greek youth is on the streets protesting against it.
What is happening in Greece is the trailer for the rest of continental Europe and the world in general.

US is just recovering from recession , if greece , italy , spain and portugal go bankrupt ,they will bring down half of the eurozone with them and whatever recovery the world mkt is making will be stalled for another 2-3 yrs .
these guys cannot let this happen
europe is our biggest trade partner any further collapse will affect both exports and remittance , many more jobs will be lost accross asia , which might pull some asian nations back into reccession

 

[kamakazi attack]

its only a matter of time before asians control the IMF.

 

[SBD-3]

I guess you should know that IMF is not dealing with Greece, it's a deal with EZ and ECB so comfort level is different as against Pakistan or any other developing country. Look, like any other lender IMF does not lend for charity. They money it lends is not created by IMF itself either, but the members qouta contributions. The role of IMF is so critical that it effectively bails a defaulter sovereign out. Just consider how would someone like Pakistan would raise foreign debt to pay its import and at what price. Like Greece, we dont have reserves but more significantly a guarantee like ECB or Germany. Any lender will demand high risk premium for lending to a country with poor credit rating, leading to high cost of debt. IMF cost even though apparently seems higher, but is significantly lower than the market cost (Greece Bond
Yield Spread was almost 1100)effectively 11% on their bond coupon. so IMF 5% charge remains at almost 50% of the market rate. IMF is an international Lender of Last resort. Its the fault of economic management of a country to fall into a situation warrenting IMF IMHO rather than IMF's.

 

[SBD-3]

IMF loan to Greece: unwarranted favour by Swaminathan S Anklesaria Aiyar

Few Indians are interested in Greece’s fiscal crisis, or the proposed IMF loan of 15-25 billion as part of a European rescue package. But Indians should worry. IMF resources raised for low and middle income countries are being diverted to bestow a special favour on a rich European country.
Greece’s problem is European, and should be tackled by its rich European brethren. It should not dip into limited IMF funds raised for poorer countries.
The global financial system was paralyzed in September 2008. All trade credit to India vanished. So did foreign loans to Indian corporates. Foreign institutional investors, who earlier poured billions into India, pulled out $9 billion in 2008. The situation was worse in other developing countries. The IMF’s lending capacity of $250 billion proved pathetic when trillions in global finance vanished.
So, in 2009 the G-20 agreed to triple the lending resources of IMF. Many developing countries contributed, including India, knowing they might need this in the next crisis. None dreamed that the expanded facility would be used to bail out rich members of the eurozone like Greece, Portugal or Spain.
Yet it is now clear that in a worstcase scenario, these countries will require the mother of all bail-outs. A JP Morgan economist has calculated that $750 billion might be needed by Greece, Portugal and Spain. Greece alone might require $150 billion, and might go bust even after that. Bond markets fear that Greek bondholders may lose 30% of their money.
Next in the firing line is Portugal. Its fiscal deficit is much smaller than Greece’s but it has a very large private sector debt. Also in the firing line is Spain, a big country of 47 million people. More distant but nevertheless in the line of fire is Italy, one of the biggest economies in the world.
This is a European problem, not an IMF problem. Why not? Because the IMF was created to deal only with balance of payments problems. The eurozone countries have fiscal problems (high government deficits), but no balance of payments problems. Eurozone countries have given up their individual central banks and currencies, and instead created the European Central Bank, which issues euros in place of old
domestic currencies. Banks of eurozone countries get euros without any hurdle from the European Central Bank. So, these countries have no balance of payments problems.
But many have fiscal problems. During the 2007-09 recession, all governments greatly expanded fiscal deficits as an anti-recession stimulus. But some European economies did not respond to the stimulus, and they now have huge fiscal deficits but no rapid growth that rebuilds government revenues. Once, government bonds of all eurozone countries were rated triple A. But Greece’s bonds have been downgraded to junk. Portuguese and Spanish bonds are under pressure, and even Italian bonds are exhibiting discomfort.
Now, the eurozone cannot afford to let Greece, Portugal or Spain go bust. The political and economic damage would be immense. European banks are the main holders of Greek, Portuguese and Spanish bonds, and a bond default by these countries would wreck the entire European financial system. So, European governments have agreed, reluctantly, to rescue Greece.
Why have they dragged the IMF into this European issue? First, rather than be tough on Greece themselves, rich Europeans find it convenient to leave the disciplining to the IMF. Second, they want the IMF to take up part of their financial burden. The IMF will lend at 3.5%, whereas the Europeans will lend to Greece at 5%, and this will provide the Europeans with an interest subsidy.
No such privilege would ever be extended to a developing country. Greece is getting a special deal because its fellow-Europeans dominate the IMF.
Poorer countries dare not stand up to Europe. But India can. It can raise a serious technical objection. The articles of association of IMF say it can lend only for balance of payment problems. And Greece has a fiscal problem, not a balance of payments one. Some economists say fiscal and balance of payments are related. True, but the distinction was nevertheless made when creating the IMF.
Absent the IMF, other eurozone countries will pick up the full rescue tab, out of sheer self-interest. They have more than enough financial muscle, and should not raid the limited coffers of the IMF.
If they need the IMF as a tough cop, let them use it as a technical consultant, not a lender. Tough cops have their uses the world over, but do not usually lend to those they are disciplining.

its 110 Billion Eurs (146 Billion USDs)

 

[amalakas]

I think most of you don't know exactly what is going on in Greece.

so ..get informed first, speak later. it is the smart choice.