Primary Country (Mandatory)

United States

Other Country (Optional)

Set News Language for United States

Primary Language (Mandatory)
English
Other Language[s] (Optional)
No other language available

Set News Language for World

Primary Language (Mandatory)
English
Other Language(s) (Optional)

Set News Source for United States

Primary Source (Mandatory)
CNN
Other Source[s] (Optional)

Set News Source for World

Primary Source (Mandatory)
AajTak
Other Source(s) (Optional)
  • Countries
    • India
    • United States
    • Qatar
    • Germany
    • China
    • Canada
    • World
  • Categories
    • National
    • International
    • Business
    • Entertainment
    • Sports
    • Special
    • All Categories
  • Available Languages for United States
    • English
  • All Languages
    • English
    • Hindi
    • Arabic
    • German
    • Chinese
    • French
  • Sources
    • India
      • AajTak
      • NDTV India
      • The Hindu
      • India Today
      • Zee News
      • NDTV
      • BBC
      • The Wire
      • News18
      • News 24
      • The Quint
      • ABP News
      • Zee News
      • News 24
    • United States
      • CNN
      • Fox News
      • Al Jazeera
      • CBSN
      • NY Post
      • Voice of America
      • The New York Times
      • HuffPost
      • ABC News
      • Newsy
    • Qatar
      • Al Jazeera
      • Al Arab
      • The Peninsula
      • Gulf Times
      • Al Sharq
      • Qatar Tribune
      • Al Raya
      • Lusail
    • Germany
      • DW
      • ZDF
      • ProSieben
      • RTL
      • n-tv
      • Die Welt
      • Süddeutsche Zeitung
      • Frankfurter Rundschau
    • China
      • China Daily
      • BBC
      • The New York Times
      • Voice of America
      • Beijing Daily
      • The Epoch Times
      • Ta Kung Pao
      • Xinmin Evening News
    • Canada
      • CBC
      • Radio-Canada
      • CTV
      • TVA Nouvelles
      • Le Journal de Montréal
      • Global News
      • BNN Bloomberg
      • Métro
Under Armour UA Tech™ Team ½ Zip Buy Now
Rimless Frame Driving Sun glasses Buy Now
SHEWIN Womens Fashion Oversized T Shirts Buy Now
Motorola Moto G Stylus 5G Buy Now
Burberry Women's Sunglasses Buy Now
Fire TV 50 inch 4K Smart TV with Alexa Buy Now
Instant Hijab Scarf For Women Buy Now
6S Wireless Bluetooth Headphones Buy Now
Cleaning Gel for Car, Tools, Laptop and Keyboard Cleaner Buy Now
Stretchy Straight Leg Dress Work Pants Buy Now
Hanes Pocket Undershirt 6-Pack Buy Now
Mens Fashion Henley Shirt Classic Buy Now
Pioneer Men's Slim Fit Cardigan Sweater Buy Now
London Fog Men's Auburn Golf Jacket Buy Now
Summer Satin Dress Elegant Sleeveless Buy Now
4K Vlogging Camera with 3" Flip Screen Buy Now
Steel Toe Lightweight Shoes Buy Now
Oxford Shirt Buy Now
Retractable 3A Multi Charging Cord Buy Now
OQQ Women's 2 Piece Skirts Buy Now
Under Armour UA Tech™ Team ½ Zip Buy Now
Rimless Frame Driving Sun glasses Buy Now
SHEWIN Womens Fashion Oversized T Shirts Buy Now
Motorola Moto G Stylus 5G Buy Now
Burberry Women's Sunglasses Buy Now
Fire TV 50 inch 4K Smart TV with Alexa Buy Now
Instant Hijab Scarf For Women Buy Now
6S Wireless Bluetooth Headphones Buy Now
Cleaning Gel for Car, Tools, Laptop and Keyboard Cleaner Buy Now
Stretchy Straight Leg Dress Work Pants Buy Now
MoreBack to News Headlines
Explained | Understanding IMF bailouts

Explained | Understanding IMF bailouts

The Hindu
Sunday, March 26, 2023 5:16 PM GMT

explains IMF bailouts, why and how they happen, how Pakistan and Sri Lanka are facing economic crisis. It also talks about the conditions imposed by the IMF for a loan

The story so far: The International Monetary Fund (IMF) last week confirmed a $3 billion bailout plan for Sri Lanka’s struggling economy. IMF officials are also in negotiations with Pakistan for a $1.1 billion bailout plan as the country faces a severe economic crisis marked by a falling currency and price rise.

Countries seek help from the IMF usually when their economies face a major macroeconomic risk, mostly in the form of a currency crisis. For instance in the case of Sri Lanka and Pakistan, both countries have witnessed domestic prices rise rapidly and the exchange value of their currencies drop steeply against the U.S. dollar. Such currency crises are generally the result of gross mismanagement of the nation’s currency by its central bank, often under the covert influence of the ruling government. Central banks may be forced by governments to create fresh money out of thin air to fund populist spending. Such spending eventually results in a rapid rise of the overall money supply, which in turn causes prices to rise across the economy and the exchange value of the currency to drop. A rapid, unpredictable fall in the value of a currency can destroy confidence in said currency and affect economic activity as people may turn hesitant to accept the currency in exchange for goods and services.

Foreigners may also be unwilling to invest in an economy where the value of its currency gyrates in an unpredictable manner. In such a scenario, many countries are forced to seek help from the IMF to meet their external debt and other obligations, to purchase essential imports, and also to prop up the exchange value of their currencies.

Meanwhile, a country’s domestic economic policies can also have an adverse impact on its currency’s exchange rate and foreign exchange reserves. For example, economic policy that imperils productivity can affect a country’s ability to attract the necessary foreign exchange for its survival. Bad luck can also contribute to a crisis. In the case of Sri Lanka, a decrease in foreign tourists visiting the country led to a steep fall in the flow of U.S. dollars into the nation.

The IMF basically lends money, often in the form of special drawing rights (SDRs), to troubled economies that seek the lender’s assistance. SDRs simply represent a basket of five currencies, namely the U.S. dollar, the euro, the Chinese yuan, the Japanese yen, and the British pound. The IMF carries out its lending to troubled economies through a number of lending programs such as the extended credit facility, the flexible credit line, the stand-by agreement, etc. Countries receiving the bailout can use the SDRs for various purposes depending on their individual circumstances. Currently, both Sri Lanka and Pakistan are in urgent need for U.S. dollars to import essential items and also to pay their foreign debt. So any money that they receive from the IMF is likely to go towards addressing these urgent issues.

The IMF was set up in 1945 out of the Bretton Woods conference. The primary goal of the IMF back then was to bring about international economic coordination to prevent competing currency devaluation by countries trying to promote their own exports. Eventually, the IMF evolved to be a lender of last resort to governments of countries that had to deal with severe currency crises.

The IMF usually imposes conditions on countries before it lends any money to them. For example, a country may have to agree to implement certain structural reforms as a condition to receive IMF loans. The IMF’s conditional lending has been controversial as many believe that these reforms are too tough on the public. Some have also accused the IMF’s lending decisions, which are taken by officials appointed by the governments of various countries, to be influenced by international politics.

Read full story on The Hindu
Share this story on:-
Run 3 Space | Play Space Running GamePlay Run 3, the ultimate space tunnel running game with 300+ challenging levels!Adv.
Traffic Jam 3D | Online Racing GameTraffic Jam 3D is a game where you’ll be driving through heavy traffic.Adv.
Duck Hunt | Play Old Classic GamePlay the classic 1984 light gun shooter game Duck Hunt on your browser.Adv.
More Related News
China-linked hackers target Taiwan's chip industry with increasing attacks, researchers say

While hacking to steal data and information about the industry is not new, there is an increase in sustained hacking campaigns from several China-aligned hacking groups.

Rupee rises 12 paise to 85.80 against U.S. dollar in early trade

Rupee strengthens against US dollar amid global oil price drop and India-US trade talks, despite FII outflows.

SBI to issue up to ₹20,000 crore bonds to domestic investors 

SBI plans to raise ₹20,000 crore through bonds for domestic investors in FY26, boosting shares by 1.74%.

Ajay Kumar Shrivastava takes over as HAL director for engineering, R&D

Ajay Kumar Shrivastava appointed as Director (Engineering and R&D) at HAL, with extensive experience in aeronautics industry.

Commerce Ministry to investigate, clamp down on dumping, “import surges”

Ministry of Commerce in India cracks down on import surges and dumping, initiating investigations on various products from 12 countries.

Gold declines ₹500 to ₹98,870/10 g; silver falls ₹1,000 to ₹1.11 lakh/kg

Gold and silver prices fluctuate, influenced by global economic factors and investor sentiment, impacting precious metal markets.

Sensex, Nifty close slightly higher amid global market uncertainty, tariff-related uncertainty

Sensex and Nifty close slightly higher amid global market uncertainty, with investors cautious about Q1 FY26 earnings.

CAPHRA red flags WHO’s recent policy shift against tobacco harm reduction

CAPHRA warns WHO's anti-tobacco harm reduction stance disproportionately impacts India, jeopardizing livelihoods and public health equity.

Services exports cut India’s trade deficit by 9.4% in Q1

India's trade deficit shrinks 9.4% to $20.3 billion in Q1, with exports up 6% to $210.3 billion.

NPCI International adds 13 more banks in UPI-PayNow linkage to ease remittances 

NPCI International enhances UPI-PayNow linkage, adding 13 banks for cross-border remittances between India and Singapore.

Global markets turned unpredictable in FY’25; external environment may continue to stay uncertain: Wipro Chairman Rishad Premji

Wipro Chairman Rishad Premji discusses the transformative financial year 2025, emphasizing AI's role and commitment to shareholders and employees.

Kolhapuri chappal row: Bombay HC dismisses PIL against Prada; questions petitioners’ right to sue

Bombay High Court dismisses PIL against Prada for unauthorized use of Kolhapuri chappals, questioning petitioners' standing.

Apple to invest $500 million in rare earths producer MP Materials: Report

Apple is expected to announce a $500 million investment in MP Materials, Fox Business reported on Tuesday, citing sources.

Parking Slot | Free Parking GamePlay Parking Slot, the best online 3D car driving and parking game.Adv.
Slope Ball Run - Play OnlineSlope Game takes you on an exciting journey of a ball on special paths.Adv.
Kenvue ties up with API to launch ‘Cough Clinics’ to train Drs 

Kenvue launches Cough Clinics with API to train doctors for effective cough diagnosis and treatment in India.

Visakhapatnam, Ranchi, Vijayawada, Nashik and Raipur emerge as career hubs in LinkedIn study

A list put out by LinkedIn highlights tier-2 and tier-3 growth pockets for professionals looking to relocate, tap into new industries or grow their careers locally

DLF forays into Mumbai with premium housing project 

DLF Ltd. enters Mumbai with premium residential project The Westpark in Andheri West, targeting businessmen, professionals, and film industry.

Zoho develops AI-powered large language model with speech recognition

Zoho unveils AI platforms including Zia LLM, Zia Agent Studio, and MCP server, emphasizing privacy and efficiency.

Axis Bank Q1 net profit slips 4% to ₹5,806 crore on higher provisions

Axis Bank's Q1 FY26 financial report shows a 4% decline in net profit, growth in NII, and impact on asset quality.

Supply PNG to households at a uniform rate, PNGRB tells CGD firms

PNGRB directs CGD entities to supply piped natural gas uniformly to domestic consumers, addressing pricing discrepancies and misuse concerns.

Wipro posts a 10% rise in Q1 net profit YoY; returned $1.3 billion to its shareholders over the last 6 months

Wipro's Q1 results show growth in net profit, revenue, and large deal bookings despite challenges in the IT services market.

Adani Group sells 20% stake in Adani Wilmar for ₹7,150 crore

Adani Group sells 20% stake in AWL Agri Business to Wilmar International for ₹7,150 crore.

Stock markets close lower on selling in IT stocks, fresh foreign fund outflows

Sensex and Nifty drop as IT shares sell off, investors cautious ahead of U.S.-India trade talks outcome.

Rupee falls 15 paise to close at 86.07 against U.S. dollar

Rupee weakens against the dollar due to trade uncertainties, equity market trends, and volatile oil prices.

India can secure oil even if Russian imports sanctioned, says Oil Minister Puri

India prepared to diversify oil imports if Russian supplies are affected by sanctions, says Oil Minister Hardeep Singh Puri.

Markets trade lower after firm start, fresh foreign fund outflows dent sentiment

Equity markets start strong but face selling pressure, waiting on U.S.-India trade talks, with foreign fund outflows impacting sentiment.

© 2008 - 2025 Webjosh  |  News Archive  |  Privacy Policy  |  Contact Us