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IMF Considers Dropping Exemption That Enabled 2010 Greek Loan

The International Monetary Fund is considering creating a new way for indebted countries to get large loans and dropping a exception to its lending rules that enabled Greece to obtain a loan in 2010 without having to first restructure its debt.

The exemption was established at the start of the European debt crisis to prevent contagion by allowing some nations to receive financing even though the fund could not say with “high probability” that their debt was sustainable. In a report released today, IMF staff proposed that a country’s creditors instead be asked for a “a relatively short extension of maturities” in exchange for IMF support.