Bailout

IMF Expands Loan Limits

By Admin

Stepping in to the bailout action, the International Monetary Fund agreed to lend Iceland $2.1 Billion to help it contend with the collapse of it’s banking system.  This is the first time since 1976 that a western country has received assistance and came in response to the collapse of the krona and the government’s need to take control of the island’s three biggest banks, Kaupthing Bank hf, Landsbanki Islands hf and Glitnir Bank hf earlier this this month when they were unable to secure short-term funding after a bank run.  (The three banks have $61 Billion of debt, equivalent to 12 times GDP.)

In addition. the IMF signaled that it’s global bailout plan will look like.  IMF will likely loosen it’s lending rules  to allow countries to borrow as much as 500 percent of their quota (the capital they agreed to contribute to the IMF), up from 300 percent, and reduce standard loan period to three to six months from three to five years.

Full post as published by Bailout Report on October 26, 2008 (boomark / email).