Like me you also have same question what happens if someone doesn’t pay money borrowed from World Bank or IMF, we have seen many countries who took large amount of money from International Organisations.
According to WECU, when a country does not return the loans to the World Bank or the IMF, this is called a default.
Defaults are not unknown.
Zimbabwe defaulted to the World Bank in 2000. After that, the Bank did not make any more loans to Zimbabwe. However, the Bank continued to support Zimbabwe through other means. Overview
by trust funds, including the Zimbabwe Reconstruction Fund, the predecessor Zimbabwe Analytical Multi-Donor Trust Fund, the Multi-Donor Trust Fund for Health Results Innovation, the Water and Sanitation Program, the State and Peacebuilding Fund, the Global Environmental Facility Trust Fund, Cooperation in International Waters, Financial Sector Reform and Strengthening, and others.
So, the Bank took no action against Zimbabwe, but continued some support.
The IMF also refused new loans. IMF declines new loans to Zimbabwe
In 2003, Argentina defaulted on IMF loans. Argentina Defaults on $3 Billion I.M.F. Debt
Later, Argentina, paid the IMF.
The main implication of default is that Western sources will not lend you any more money. Probably China will also not lend you any more untied money. So, it becomes difficult to do international transactions. In the end, countries find it simpler to pay the IMF and the World Bank.
Historically, if the debtor had a weak military, someone would invade to collect the debt; or a sneaky country would engineer a coup. But that hasn’t happened recently.
There’s always a lot of yelling a screaming, but basically the creditors agree to take some fraction of what they were owed. The creditors agree because otherwise they get nothing. The country agrees, because paying some of the debt gets it other things it wants.
A few years later, creditors have forgotten about the default and are loaning new funds at low interest rates. Spain has defaulted 18 times since 1557; Ecuador and Venezuela each 11 times since 1826; Brazil 10 times since 1898; Nigeria five times since 1982. The US defaulted three times from 1779 to 1798; and three times since if you count revoking a promise to buy dollars with gold; moreover twice in the 1800s was hit with massive waves of state and local government defaults; yet its debt is often said to be risk-free.
The point is sovereign governments default all the time. Defaults are far more common than any country repaying all of its debt. The usual pattern of sovereign debt is that it grows quickly in wartime, shrinks a bit for the winner after the war while the loser defaults, then grows slowly in peacetime. It hardly ever goes down significantly.
Historically, if country a declares bankruptcy because it can not pay out debt not in it’s own currency, usually debt will be regonetiated.
For example, Germany in 1953? (I may not remember date exactly) had it’s debt halved in half and the rest stretched for 30 years.
That was a common procedure, until recently. Compare treatment of Germany with Germany treatment of Greece. EU with Germany in lead closed Greek banks and this forced Greece to accept draconian conditions. Greece lost more then 2 million of most active population, losta huge part of there GDP, forced to sell all public assets and push it’s retied population into poverty. Before that, when Argentina declare bankruptcy, vulture fund buy Argentina debt and force Argentina to pay it of by using US court to close Argentina access to financial services in US.
Basically Governments loose power to corporation and any reason disappear from international politics.
IMF is an under cover organization of United States that was formed to provide loans to the poor countries. Guess what, no country was born poor except that it was corrupted by its own people. Before you go ahead understand the economy of a country, these simple finance courses can help you get started on ways the economy grow. US loves those monsters and thus give loans to third world countries that are popular for corruption. And guess again, they are the one who owe IMF the most.
Apparently, it may look like a stupid way to run a profitable business but IMF is a stooge organization of US to dominate third world countries providing loans to the countries and the leaders of those countries fill up their foreign personal banks with that money and a little goes to the treasury. This makes country fall into heavier debts every day?
But what does IMF gets in return? US is popular for its adventure around the world, the most popular adventure in Iraq, Yemen, Somalia, Africa, Syria etc destroyed those nations so when the so called leaders failed to repay loans, IMF, the deceiving organization lends them money again even more but this time there are preconditions for it.
This is where US plays its satanic game. Bringing out the card of inflation, taxes, etc i.e they ask to increase prices across the country so that people would then be suppressed and in the end, people of those countries repay that loan which wasn’t used on them for their welfare. Amazingly, those taxes are also exploited and a little goes to the loan repay.
IMF will always give loans after loans because in the end they’re loosing nothing but fulfilling their agenda to suppress the third world nations with the western domination, oppression and hegemony. This suppression put checks on the people who might rise up against their govt/dictators that might in turn, turn against the US interests in the region.
Remember, a powerful economy like US wouldn’t allow even its allies to rise up. Uncle Sam hates competition to the extent that he might conquer your country for no reason.