Choosing Between the IMF, World Bank, or Direct Borrowing

[Casdinyard]

There many countries that are in debts to the World Bank and the International Monetary Fund. When countries are facing financial constraints  and need funding to fix their economy they approach lenders of which these the IMF and World Bank fall into these group. I know that during the covid-19 pandemic the IMF loaned some countries money to solve the problem that came along with it.

Question
How does a country determined  which of these organizations to approach for funds. If these institutions are always availed to receive. Some countries are not going through these structures rather they borrow directly from the bank of another country. Which is better?

I believe it's all a matter of preference and whether or not they are in good credit standing with the banks in question (of course) as with all credit providers the IMF and the World Bank do not provide loans to countries who they deem unable to pay their loans, based on their economic standing (although rarely), their credit behavior (which is why they can't give out loans to North Korea, the fucking country still owes Sweden $300 million to this day for all the VWs they loaned) and whether or not they are politically stable.

Some countries rely upon their neighbors or allies, wherein they turn towards export or flat out loans, and although very rarely, they are provided such loans with prerequisites to follow. The IMF has always given out loans even during the harshest of times so it's got a good standing among many a government, but the World Bank is definitely up there when it comes to helping countries recover during harsher local financial and economical struggles. So since they are often times always available anyway, it all just boils down to which one's more accessible at the time.

[stompix]

Typically, a country’s government and the IMF agree on a program of economic policies before the IMF lends to the country. In most cases, a country’s commitments to undertake certain policy actions, known as policy conditionality, are an integral part of IMF lending.

Direct borrowing may not have so many requirements for eligibility,  so maybe countries do direct borrowing when they know that they are not borrowing for capital projects or policy actions

They are not borrowing for policy actions, they require policy actions before lending.
It's pretty simple why and how it works
- country A is in debt, and nobody is sane enough to loan them, they ask the IMF for a loan
- the IMF says, ok, but you don't offer collateral and we don't take it, you're going more in debt, and you have no change on the horizon so we will lend you if you implement changes that will allow you to pay bacK
Let's assume you have a friend who is a gambler and asks you for money, isn't the first question you're asking him about putting a stop to gambling and taking a serious job so he can pay you back?

You see IMF and World Bank, that two institutions has destroyed a lot of countries than they have helped all this while. These two institutions wouldn't borrow any country money until they meet their terms and conditions. On a norms, it's their right to give you conditions for a loan either with collateral or no collateral or base on mutual ground but you see that condition of making countries do as they want is a no for me.

You have a country in debt and with such a bad economy somebody else is offering to lend you money, don't you think it's reasonable to ask for changes before lending?

Anyhow, funny how nobody has said a word about Salvador
So, can Bukele fans offer me a valid explanation as to why is he still in talks with the IMF and why he is desperately asking for billions?

[WillyAp]

Anyhow, funny how nobody has said a word about Salvador
So, can Bukele fans offer me a valid explanation as to why is he still in talks with the IMF and why he is desperately asking for billions?

I'm not a fan although I'd like that some of his policies would be applied in the country I choose to live in. How do you get to "he is desperately asking for billions"?

He asked but desperately?
No one knows about San Salvador's finances, well Ok the Finance minister might. But he is not a member of Bitcointalk. He has some advisors from Venezuela and that although he once blasted them

[stompix]

He asked but desperately?
No one knows about San Salvador's finances, well Ok the Finance minister might. But he is not a member of Bitcointalk. He has some advisors from Venezuela and that although he once blasted them

Yup, it's coming close to the last stage of FAFO
https://archive.ph/V6s83
https://www.globalcapital.com/article/2d44tmst4n3d8s0mkk4jk/people-and-markets/comment/el-salvadors-bond-is-innovation-for-all-the-wrong-reasons

El Salvador is returning to global debt markets with a dual-tranche offer, including a bond that will pay investors a higher interest rate unless the government can win credit upgrades or a deal with the International Monetary Fund.
This will pay investors 0.25% for the next 18 months. After that, this rate will jump to 4% for the rest of the bond's life, unless El Salvador has met one of two conditions. Either it must agree a new deal with the International Monetary Fund, or it must be upgraded from B-/CCC+ to B/B.

Unless he gets financing he will have to pay:

The amortising structure means that in return for $899.23mn now, El Salvador is committing to pay creditors $92.5mn annually in interest, and then $333.3mn in principal each year in 2028-2030.
The accompanying warrants add another $2.5mn in annual interest costs, but if El Salvador doesn’t get several credit rating upgrades or secure an IMF programme by October 2025 the cost of the warrants jumps to $40mn annually.
So — if we’ve got the details correctly and done the maths right — annual interest payments of $132.5mn on ca $900mn of debt, for a country already in financial stress.

Bet you won't see him mentioning this between laser eye pics on Twitter  
Greece had less to pay back in the days than what Salvador is going to.

[WillyAp]

Bet you won't see him mentioning this between laser eye pics on Twitter  
Greece had less to pay back in the days than what Salvador is going to.

El Salvador claims to desire an IMF programme but has been talking about one for at least three years, with very little action. The IMF and the government do not see eye-to-eye.

Many 3rd World countries carry a grudge with the IMF, World Bank, USA due to earlier dealings with mostly arrogant clerks.
Something the Chinese know how to make good use off so it looks. Add to that some nationalism and you have the tenor that article complains about.

Few people in the 1st World know what their civil servants did abroad. A publik excuse could go a long way.