Typically, a country’s government and the IMF agree on a program of economic policies before the IMF lends to the country. In most cases, a country’s commitments to undertake certain policy actions, known as policy conditionality, are an integral part of IMF lending.
Direct borrowing may not have so many requirements for eligibility, so maybe countries do direct borrowing when they know that they are not borrowing for capital projects or policy actions
They are not borrowing for policy actions, they require policy actions before lending.
It's pretty simple why and how it works
- country A is in debt, and nobody is sane enough to loan them, they ask the IMF for a loan
- the IMF says, ok, but you don't offer collateral and we don't take it, you're going more in debt, and you have no change on the horizon so we will lend you if you implement changes that will allow you to pay bacK
Let's assume you have a friend who is a gambler and asks you for money, isn't the first question you're asking him about putting a stop to gambling and taking a serious job so he can pay you back?
You see IMF and World Bank, that two institutions has destroyed a lot of countries than they have helped all this while. These two institutions wouldn't borrow any country money until they meet their terms and conditions. On a norms, it's their right to give you conditions for a loan either with collateral or no collateral or base on mutual ground but you see that condition of making countries do as they want is a no for me.
You have a country in debt and with such a bad economy somebody else is offering to lend you money, don't you think it's reasonable to ask for changes before lending?
Anyhow, funny how nobody has said a word about Salvador
So, can Bukele fans offer me a valid explanation as to why is he still in talks with the IMF and why he is desperately asking for billions?
