New Credit Line Approved, May Help Eurozone Countries Recover
The International Monetary Fund (IMF) announced Tuesday that a new credit line was approved in an effort to help the European Union recover from its economic crisis.
The new tool- the Precautionary and Liquidity Line- can now help a county "borrow up to 10 times its contributions to the IMF to help pay its bills," said The Wall Street Journal.
"The Fund has been asked to enhance its lending toolkit to help the membership cope with crises," said IMF chief Christine Lagarde in a statement as reported by WSJ. "We have acted quickly, and the new tools will enable us to respond more rapidly and effectively for the benefit of the whole membership."
The New York Times reported that the fund said "it approved revisions to help countries with 'relatively strong policies and fundamentals'" (the countries that had been affected by the Eurozone debt crisis but did not cause it) — otherwise known as, “crisis-bystanders."
The goal, the fund said, is to “break the chains of contagion.”
According to the Times:
A bolstered IMF could provide the liquidity that Europe needs and its involvement could reassure investors, experts said. But the fund would require significantly more resources to be able to help big euro zone countries, like Italy.
Italy, despite its struggling economy that has led to a restructuring of its government, has decided not to take the precautionary credit line and instead has opted to have the IMF monitor "its promised economic reform."
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