When a country borrows from the IMF; is the Central Bank that borrows or the Government?

Question

Borrowing from the IMF is normally when a country experiences balance of payment problems. Therefore is it not the responsibility of the Central Bank (CB)? in which case the CB would borrow and repay from any future foreign exchange holdings. Or does the Government undertake this borrowing on the CBs behalf? in which case the debt would be repaid by the public and domestic currency exchanged for any CB holdings of foreign exchange. In either case the economy would have to directed towards incresing the level of exports / reducing imports. Just wanted to know how this operation actually takes place, the interaction between the two balance sheets (CB and Government), where the liability is held and how it is paid back. Any economics experts out there?

Answer 1

its a big capitalist game buddy . concentrate on who owns the cb or imf and where the real money is going borrowing is just amask to parellel funds

Answer 2

Mikey is absolutely right. The reason the government borrows from the IMF in the first place is that things have gotten so bad that the government cannot borrow in the open market. Therefore, it borrows from the IMF as a stop-gap measure.

The IMF loan always comes with conditions, much like any bank would put conditons on any loan. These conditions can involve reining in excess government spending, for example.

Often the open market will then start lending to the country because the IMF's lending (on a conditional basis) is viewed as a signal that the country is seriously prepared to turn things around.

Answer 3

The government because the central bank is not the body which carries recognized authority by the IMF. The IMF loans monies only to the governing bodies of member states, not the monetary managers (central banks) of those governing bodies. The government usually gives some of the loan to the central bank for use and organization, but CBs never actually borrow from the IMF on behalf of a member state.

Answer 4

It has to be the country, because not all countries have a central bank.