Austerity Measures Reading Passage
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Austerity Measures Reading Passage
Paragraph A
A state takes action to pay back its creditors, called austerity measures. These measures include slashing government hiking taxes and expenditures, and generally, it will be imposed on a country when its national deficit seems unsustainable. Banks likely lose faith in the government's potential or willingness to repay existing debts in these circumstances. As a response, it refuses to carry over the current loans and asks for excessive interest rates on new lending. Often, governments turn to the International Monetary Fund (IMF), an intergovernmental organisation that functions as a lender of last resort. The typical reaction to this is that the IMF demands austerity measures so that the indebted country can reduce its budget deficit and be able to fulfil its loan obligations.
Paragraph B
In 2010, a wave of austerity across Europe saw cuts and freezes to pensions, welfare, and public sector salaries, along with hikes in some taxes and excises. The Greek program tried to reduce the budget shortfall from 8.1 per cent of GDP in 2010 to 2.6 per cent in 2014 by freezing public sector incomes and decreasing public sector allowances by 8%. In addition, VAT - the Greek sales tax - will be increased to 23 per cent, and tax on tobacco, fuel, and alcohol will also increase. Compared to the current retirement age for men, the statutory retirement age for women is raised to 65. This sort of reform is not popular in Greece. Furthermore, the series of general strikes dented the economy.
Paragraph C
IMF-imposed austerity measures have been charged for motivating the deep recession following the Asian financial crisis of 1997. From the early 1990s, international investors from rich countries like Japan and the United States invested large amounts of money into Southeast Asia to make some quick returns and the soaring economies of Thailand. The title “the Asian Tigers” was earned by the Philippines, Malaysia and others. Nonetheless, foreign investors are frightened when things go bad and retract their investments in the masses, decimating Asian currencies and turning millions of employees out of work. The IMF’s job in the recovery was to impose austerity measures that kept interests high, simultaneously, the wages and labour standards are driven down when workers are already suffering. According to one former IMF economist, the actions undertaken on a global scale caused the deaths of 6 million children every year.
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