After several months of gruelling power struggles, government officials have now brought together a substantial amount of Cash Mountain to effectively curb the worsening European region crisis. The next big predicament whether or not such plans will work and uplift Europe’s turmoil is still a debacle at present.
The world’s finance ministers in last Sunday’s meetings in the United State’s capital in Washington are fervently hoping to convince investors that governments from the region are very much capable of reducing the financial uproar. The said cash mountain will ultimately be used to subsidized governments that are critically in debt because of towering financial borrowing costs. The outcome of the said meeting could hopefully aid and prevent such inclining borrowing costs to a minimum. However there are still speculations and constraints whether or not such funding could ever be available for easy deployment that made insistent investors doubt whether that money would be enough for their return in investments.
The $700 billion lending capacity of the IMF and Europe’s €700 billion allotted rescue fund are specifically set aside to restore confidence to the markets and investors that governments won’t fall short of their debts. However the irony of which is due to the political restrictions such that the allotted funds are actually smaller than what officials actually thought when they examined the economic risks in the previous year.
The next problem is then focused on the how to precisely release the necessary funds if needed. In order to access Europe’s access funds, two of Europe’s largest economies Spain and Italy would have to request the help of other European governments in order to provide a consensus. Studies however point out that there are still lingering doubts whether the funds borrowed from two aforementioned European countries would increase in the long run.
Making use of the IMF funds appears to be difficult even thought nations outside the European zone have promised new funding to IMF at last week’s proceedings that resulted in nearly doubling the funds loaning ability. The downside however is that struggling nations in need of money requests would have to win the vote of the IMF’s board which constitutes 188 member governments. Still there are many international officials that see the funds rather diminutive if the investors don’t consider recipient nations to undertake the required reforms such as structural overhauls, cutbacks in budgets in order for their economy to rise up and be more competitive.