Greece’s problem is European, and should be tackled by its rich European brethren. It should not dip into limited IMF funds raised for poorer countries.
The global financial system was paralyzed in September 2008. All trade credit to India vanished. So did foreign loans to Indian corporates. Foreign institutional investors, who earlier poured billions into India, pulled out $9 billion in 2008. The situation was worse in other developing countries. The IMF’s lending capacity of $250 billion proved pathetic when trillions in global finance vanished.
So, in 2009 the G-20 agreed to triple the lending resources of IMF. Many developing countries contributed , including India, knowing they might need this in the next crisis. None dreamed that the expanded facility would be used to bail out rich members of the eurozone like Greece, Portugal or Spain.
Yet it is now clear that in a worstcase scenario, these countries will require the mother of all bail-outs . A JP Morgan economist has calculated that $750 billion might be needed by Greece, Portugal and Spain. Greece alone might require $150 billion, and might go bust even after that. Bond markets fear that Greek bondholders may lose 30% of their money.
From Swaminathan S Anklesaria Aiyar's article in The Economic Times