This archive report was first published on 9 October 2019.
On October 9, 2019, the Jubilee Debt Campaign (JDC), a UK-based group, accused the International Monetary Fund (IMF) of reckless lending to financially troubled countries.
The IMF extended credit worth $93 billion to countries without any debt restructuring plans, creating a moral hazard where countries know they will be bailed out regardless of their risky loans, according to JDC.
The IMF has been criticized for issuing loans to 18 highly indebted countries, including Ecuador and Egypt, without requiring debt restructuring plans.
“By constantly bailing out countries in debt crisis without requiring debt restructuring, the IMF is placing the burden of a crisis squarely on the shoulders of the citizens of a debtor country, letting lenders off the hook and ensuring the cycle of debt crises continues,” said Sarah-Jayne Clifton, the campaign’s director.
IMF research shows that IMF programs work well when combined with debt restructuring, with a 45% success rate in highly indebted countries. However, high debt countries without a debt restructuring program recorded only a 5% success rate.
Despite this, the IMF granted credit to various high-risk countries without debt restructuring plans, including Argentina, which received a loan of $56 billion despite the agency classifying the debt as unsustainable.
