Sorry to ruin your idealistic concept of the IMF loan repayment. They are getting paid back by portions of future loans. In essence, next year's loan amount must be greater than last year's, because part of that new loan will be used to pay off old loans.
To reiterate .. if the loan were to stop now, there will be no repayment, period. In essence, the loans must continue in order to settle the old loans. The loans themselves have never and will never be paid back. Just look at how much the loans have increased over the years. There are many countries whose economies depend on these loans.
However, they may get returned, indirectly, from the resulting economic/commercial activities that follow. Loans are made to stimulate and stabilize local economies such that the buying power of that countries will perpetuate and increase over time. That is the goal of global expansion and prosperity - creation of wealth and buying power worldwide. It was to create and elevate global spending power, to buy US companies' products. The indirect benefits will be in terms of investments, employment, taxes, revenues, etc.
When it fails, that loan became poof!!! They have to start from ground floor once again. That is no big deal, since US and Europe still have enough economic expansion and power to absorb the losses. Similar to business business writeoff, that's all.
Worst come to worst, there is one easy solution. Create enough time for hyper inflation which will cheapen the value of these loans. That's writing off bad loans from the books of industrialized G7 countries banks, not just the US banks.
Ever wonder why credit card rates are high? It is partially to cover the bad loans. |
