The International Monetary Fund Ended 2010 Loan Exemption.
The International Monetary Fund said on Wednesday it ended an exemption to its lending rules that had allowed it to make major loans to Greece, Ireland and Portugal in 2010 and 2011 to fight a growing euro-area sovereign debt crisis. Efforts to remove the “systemic exemption” were required by legislation passed by the U.S. Congress in December to implement sweeping reforms at the IMF that grant more voting power to emerging market countries including China and Brazil. The exemption was created by the IMF in 2010 to lend to countries whose ability to repay debt was in question, but where it was feared that a default would set off a systemic crisis. “The objective of this reform is to better calibrate IMF lending decisions to members’ debt vulnerabilities, while avoiding unnecessary costs for the members, their creditors, and the overall system,” IMF spokesman Gerry Rice said in a statement.