Reuters quotes Global Business and Economics Program Director Andrea Montanino on why despite Lagarde’s initial reluctance, the International Monetary Fund is on the hook for Greece:
While the IMF was worried about contagion when it made the loans, it also had institutional incentives for wanting to bail out troubled countries, said Andrea Montanino, a former IMF board member who left the Fund in 2014 after participating in reviews of Greece’s second bailout in 2012.
“The IMF is in a preferred creditor status; the more you lend, the more you earn,” said Montanino, now with the Atlantic Council.
The IMF’s heavy involvement in large bailouts for euro zone countries, which included Ireland and Portugal, have enabled it to build up its reserve buffers in recent years. It is now aiming to store away some $28 billion by 2018.