IMF in the news
Ireland’s parliament approved an 85 billion euro EU/IMF bailout, paving the way for the IMF to approve its 22.5 billion portion of the funds. Under the deal Irish people face years of cutbacks and tax increases in return for fresh capital to shore up the banks.
The IMF is set to boost its credit line to Mexico to more than $70 billion after President Felipe Calderone said the country had asked the IMF to extend the current credit line from $48 billion. Mexico first set up the facility in 2009 as a precaution when the global financial crisis knocked its peso to a record low.
Serbia’s finance minister indicated the country could seek a precautionary IMF loan in 2011 after its existing $3.97 billion stand-by deal expires in February. Serbia has agreed with the IMF to target a 2011 budget deficit of 4.1 percent of GDP under the terms of the loan, which it secured in 2008.
The IMF wants Sri Lanka to loosen its exchange rate policy but praised the country’s tax, fiscal and investment reforms set out in the 2011 budget. The IMF said the tax reforms, including scrapping the blanket tax holidays for foreign investor in favor of incentives targeting priority sectors like tourism, infrastructure and telecoms, would have a positive net revenue impact.
Belgium needs to quickly come up with a plan to reduce its budget deficit to 3 percent of GDP by 2012 from 4.8 percent in 2010, said the IMF following annual consultations with Belgian officials. It warned that debt market concerns could undermine Belgium’s economy recovery and encouraged the country to tighten its budget by eliminating fiscal incentives for early retirement, reduce pensions that are taken before the legal retirement age of 65 and reduce health care costs.
Romania’s government looks set to pass a 2011 austerity budget, which is a key requirement of a 20 billion euro IMF-led bailout. The recession hit country has so far received 16 billion euros from the IMF, which required Romania to make drastic spending cuts, hike taxes, and cut thousands of jobs.
The IMF cut Russia’s 2010 GDP forecast saying the government needs to move ahead with structural reforms and strengthen its fiscal policy by raising interest rates and allowing the ruble to trade freely to combat inflation.