Trapped in the Eurozone: Why Greece MUST reduce Fiscal Deficit

The IMF has asked Greece to focus on reducing its fiscal deficit. It can't ask it to change interest rates or exchange rates since Greece is in the Eurozone. There have been other situations when borrowers only had fiscal policy to rely on e.g. $30bn rescue of Brazil in 2002 (the indexing of Brazil's debt to USD or STIRs precluded the use of monetary policy). The bailout of Brazil was also in American interests: General Motors had invested a large amount in Brazil, Citigroup had $9.7bn in Brazilian loans.