why debtors like the IMF or the EU demand austerity measures when austerity may cause economic downturns like Greece?
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It comes down to politics. IMF didn’t ask for austerity per say. It actually asked for debt reduction and more investment plans.
EU was asking for austerity, mainly because of politics. It’s politicians answer to their own electorates and their goal is to get re-elected not to recover the economy or whatever else.
It is easier to blame the downturn of your own economy to someone else who can be seen as an scapegoat rather than admit your own failings and get to work to restructure stuff. It takes time to rebuild an economy and politics is shortsighted.
Don’t be confused, Greece had it’s problems and remains a problematic economy due to structure. But French and German banks, mainly, needed a bailout of the Greek bonds they had bought under the watch of the EU policies and politicians.
It was easier to discuise the bailout of private banks as a rescue plan for Greece and blame Greece for it’s failings, rather than explain what went wrong.
The anti-EU sentiment would have increased a lot and might have broken up the EU, the Banks Needed the bailout, there is no question about it and letting them fail was not an option. If people learned the truth then this was seen as a doomsday for EU and the politicians that supported it’s policies and were in power then.
At least this way you make people accept sacrifices while also keeping the system going on and them obedient. Their dissident will be with the forengers not the policies and institutions politicians wanted intact.
Edit: some mistakes sorry I am typing from mobile
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