How Republicans Would Stop U.S From Funding IMF Loans to Greece |
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May 13, 2010
When the International Monetary Fund first said it would contribute $39 billion to a $145 billion bailout fund for Greece, blogosphere commentators said the U.S. shouldn’t pay its share. But the IMF doesn’t make that possible.
When the International Monetary Fund first said it would contribute $39 billion to a $145 billion bailout fund for Greece, blogosphere commentators said the U.S. shouldn’t pay its share. But the IMF doesn’t make that possible.
Think of the IMF as a global credit union, where the U.S. is the largest member. The U.S. can vote up or down on a loan — it has about 17% of the votes — but it can’t block the loan if a majority of the other shareholders approve it. (Nearly all IMF loans are approved unanimously.)
Once the loan is approved, the U.S. must chip in its share. It lends the IMF money at 0.25% interest rate, as do all IMF members, and the IMF lends to borrowers at about 3%. The exact portion of the loan accounted for by the U.S. is hard to calculate because of the recondite procedures of the IMF, but it’s probably somewhere between 10% and 20% of the total.
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