IMF may drop exemption that enabled 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 on Monday, IMF staff proposed that a country’s creditors instead be asked for a “a relatively short extension of maturities” in exchange for IMF support.

“It has become clear that the systemic exemption established in 2010 does not provide a coherent long-term solution to the problem,” staff wrote.

The proposed changes would “help the member improve its capacity to service its debt without necessarily requiring significant debt reduction.”

The Washington-based IMF has been trying to draw lessons from its bailouts in the euro region and in particular in Greece, which in 2012 ending up pushing through the largest sovereign restructuring in history.