The US$1 trillion bailout package announced on Friday will cover most of the cost of the bailout, but it will not cover the cost to other creditors, which includes countries in the European Union, Russia, Japan, and South Korea.
The package also includes an emergency credit line, which could be used to cover future debt, and a new set of measures that could allow for the US to take a further €1.5 trillion in steps to get the country back on track.
The $1.9 trillion bailout is a deal that was approved by Congress last month.
The deal is being considered by the White House, which has said that the US must pay a minimum of €1 trillion, or about 10 percent of gross domestic product, to the other countries in order to keep the eurozone afloat.
The other countries are: Germany, Ireland, Italy, Spain, Portugal, France, Belgium, the Netherlands, Luxembourg, Greece, Cyprus, and Slovakia.
However, if the US wants to add more countries to the list, that would likely require a separate deal.
The agreement will come into effect on July 1, 2018.
“The US has the right to take the necessary steps to make sure that the eurozone is in good health, that its banks are solvent and that its government is solvent,” said Christine Lagarde, the IMF’s managing director for the euro zone.
“This agreement is the start of a new era in the eurozone, one in which the eurozone will have more financial strength and that the institutions are accountable to each other.”
Lagarde said that while the agreement is a step in the right direction, it is not enough.
“We cannot allow the United States to keep its promises and obligations to other countries,” she said.
“So far, we are only talking about €1,000 billion, but the other institutions will need to be bigger than that, to keep up with the US.”
The new IMF chairwoman Christine Lagard speaks at the IMF headquarters in New York City, U.S., June 10, 2020.
Lagarde also said that there will be new rules in place to ensure that the countries receiving the bailout are in good financial health.
She said that all the countries participating in the bailout must meet the same criteria as countries who did not qualify for it, and they must also be able to continue to invest in infrastructure, including hospitals and universities, schools, and universities.