They want “assurances” that the government will have enough in the budget to repay the loan at some point, so that’s how they introduce them.
The loans will generate inflation, which will devalue the local currency, which means the loan’s value will decrease as well (this will happen because the value of interest rates paid back will decrease).
Furthermore, they are ideologically opposed to inflation and deficit spending (like all neolibs). They believe that these 2 factors are what destablizes economies, so they demand a government avoid them like the plague.
They believe that the economy does not rely on the proletariat’s economic activity (i.e. buying products and paying bills). They believe that the economy relies on the national loaning industry (i.e. the banks giving loans to people) and the rich people opening up businesses. They are very much adherents of “Reaganomics” or “trickle-down” economics. They think that inflation will damage the accumulated capitals of the rich and the banks, therefore, the economy will not be able to restart.
They want other measures to benefit the capitalist class, so they can help boost the economy (according to their ideology). A big portion of the loans is always allocated to banks, and the rest is either subsidizing corporations directly or indirectly. A certain amount may be used to restructure other existing loans of the government. A major concession they demand is to lower corporate and high-income taxes. Which means the government needs to cut the budget allocated for the benefit of the proletariat to account for the lost income. They usually suggest raising low-income taxes or invent new methods of taxation that targets low-income citizens (e.g. the employer portion of social security payments is decreased, and the employee portion is decreased).
Essentially, IMF-imposed austerity means that the rich get richer and the poor get poorer. Which is just fine as far as the IMF is concerned, because that’s what they think makes for a better economy. In addition, a small class of super-rich people is easier to control and manipulate, and they in turn have an easier time influencing the government.
Look up “shock therapy”. That’s what the IMF believes in.
I just wouldn’t say that they are opposed to deficit spending, they know it works and demand from undeveloped countries that they don’t do it on the basis that it’s safeguarding their ability to pay the debt, so they essentially turn the whole country into a debt paying machine which is unable to develop social infrastructure, national industrial complex, its forced to sell whatever the country has too keep the debt from spiraling out of control
That’s true as well, but because deficit spending raises inflation, they are also ideologically opposed to it.
Deficit spending usually is done to maintain social welfare programs, which makes more money available to low income citizens, which raises inflation. It’s telling that the first parts of the budget they always want to be cut are government wages and benefits.
This also acts as a signal for the private sector that it’s ok to reduce wages.
But they don’t hold it against the US or European countries, even with inflation but to under developed countries any amount of deficit spending is a deadly sin which gravely damages their risk indices
They applied the same things to the European PIICGS that went under (Portugal, Italy, Ireland, Cyprus, Greece, Spain), in coordination with the European Central Bank.
They don’t care as long as it’s not the US, the UK, and to some extend France, Switzerland and Germany. Maybe the Scandinavians would get away with it too. Everyone else is fair game.
They want “assurances” that the government will have enough in the budget to repay the loan at some point, so that’s how they introduce them.
The loans will generate inflation, which will devalue the local currency, which means the loan’s value will decrease as well (this will happen because the value of interest rates paid back will decrease).
Furthermore, they are ideologically opposed to inflation and deficit spending (like all neolibs). They believe that these 2 factors are what destablizes economies, so they demand a government avoid them like the plague.
They believe that the economy does not rely on the proletariat’s economic activity (i.e. buying products and paying bills). They believe that the economy relies on the national loaning industry (i.e. the banks giving loans to people) and the rich people opening up businesses. They are very much adherents of “Reaganomics” or “trickle-down” economics. They think that inflation will damage the accumulated capitals of the rich and the banks, therefore, the economy will not be able to restart.
They want other measures to benefit the capitalist class, so they can help boost the economy (according to their ideology). A big portion of the loans is always allocated to banks, and the rest is either subsidizing corporations directly or indirectly. A certain amount may be used to restructure other existing loans of the government. A major concession they demand is to lower corporate and high-income taxes. Which means the government needs to cut the budget allocated for the benefit of the proletariat to account for the lost income. They usually suggest raising low-income taxes or invent new methods of taxation that targets low-income citizens (e.g. the employer portion of social security payments is decreased, and the employee portion is decreased).
Essentially, IMF-imposed austerity means that the rich get richer and the poor get poorer. Which is just fine as far as the IMF is concerned, because that’s what they think makes for a better economy. In addition, a small class of super-rich people is easier to control and manipulate, and they in turn have an easier time influencing the government.
Look up “shock therapy”. That’s what the IMF believes in.
I just wouldn’t say that they are opposed to deficit spending, they know it works and demand from undeveloped countries that they don’t do it on the basis that it’s safeguarding their ability to pay the debt, so they essentially turn the whole country into a debt paying machine which is unable to develop social infrastructure, national industrial complex, its forced to sell whatever the country has too keep the debt from spiraling out of control
That’s true as well, but because deficit spending raises inflation, they are also ideologically opposed to it.
Deficit spending usually is done to maintain social welfare programs, which makes more money available to low income citizens, which raises inflation. It’s telling that the first parts of the budget they always want to be cut are government wages and benefits.
This also acts as a signal for the private sector that it’s ok to reduce wages.
But they don’t hold it against the US or European countries, even with inflation but to under developed countries any amount of deficit spending is a deadly sin which gravely damages their risk indices
They applied the same things to the European PIICGS that went under (Portugal, Italy, Ireland, Cyprus, Greece, Spain), in coordination with the European Central Bank.
They don’t care as long as it’s not the US, the UK, and to some extend France, Switzerland and Germany. Maybe the Scandinavians would get away with it too. Everyone else is fair game.