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Why Does the IMF Require Some Type of Austerity Program

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Why does the IMF require some type of austerity program on its loans?

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Definitions:

World Price

The global market price of a good or service, influenced by international supply and demand.

Free Trade

The elimination of tariffs, quotas, and other trade barriers between countries to allow for the unrestricted exchange of goods and services.

Autarky Price

The price of goods in a closed economy that does not engage in international trade.

Domestic Supply

The total amount of goods and services produced within a country that is available for purchase.

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