Fears of Poor interest rates for Swedish loan to the IMFTuesday, 31 January 2012
Sweden wants to do business with the IMF buy providing some of its excess cash to indebted countries but it looks that would turn out to be a very bad business.
The hope was that to guarantee risk free lending to indebted nation and to make some substantial returns, a good interest rate was targeted when the money was to be lent through IMF.
But it turns out that Sweden will end up getting a bad rate on the Skr100 billion that the government wants to lend to Europe crisis countries through the International Monetary Fund IMF.
AdvertisementAccording to Swedish television news program, Rapport, Sweden may only earn 0.1 percent in interest on the money that will be lent out.
The Swedish Prime Minister had insisted that the loans were to be lent pout on market terms, but reports show that it may not get interest rate on the loan above 0.1 percent - far from market rates.
According to Anders Borg, minister of Finance, the loan is basically risk-free. Borg is not worried that Sweden would have trouble getting the money back.
“For him there is a very small risk of loosing the money”.
But critics argue that it’s not true. If it goes badly with the euro crisis, countries may find it difficult to pay back even though the IMF is called a preferred creditor. This has happened earlier in the IMF's history according to some critics who spoke to Swedish television.
Therefore, some of these critics believe that there is some risk that taxpayers will ultimately lose on this business. Despite that, in what seem to be a gesture of charity they argue that on the other hand, Sweden will help to avoid a severe international financial crisis through this move.
Today, Sweden via the Riksbank (central bank) has provided a loan engagement of over Skr70 billion. Of those, the IMF has used Skr11.5 billion. The Skr100 billion being discussed now is not part of that.
By Scamcomark.se Team
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