why debtors like the IMF or the EU demand austerity measures when austerity may cause economic downturns like Greece?
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In Greece the issue was the business model clash between the EU architecture and the greek economic reality. The eu is based upon an export model, where you get as efficient as possible so you sell to others at the cheapest possible price, this is primarily german, and Chinese models, the inverse is the Americans model which is based upon internal consumption where people buy as much as possible and sell services or investments to other people.
Now the greek economic architecture is based upon shipping, tourism, and high end oils such as olive oil. Not many things to export(washing machines, audisetc) , but lots of things people want buy internally eg holidays, drinks, property rentals, booze. The global financial crash messed with finances of loaning money and it stopped coming in for Greece. This destroyed the greek budget and it also meant a lot of European banks could fail if not paid back bankrupting the eu. So the eu “bailed out” greece
But As such the eu prioritised making sure those debts were paid back., but in doing so they also applied the logic of becoming efficient to export things as is the business model they are used to. This meant greece had to be more efficient with its prices, the biggest component of this is wages in the greek economy. So they deliberately ensure that wages and other inflationary things such as government expenditures were depressed so that greek “goods” would be cheaper to export. Even though most economic activity for Greece is actually imported via tourism etc. in in effect they depressed living standards to reduces prices . Which is also called austerity. Bad times for the greeks, but it ensured that bnp or soc general didnt go bankrupt
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