Learn more about Austerity
In economics, austerity is when a national government reduces its spending in order to pay back creditors. Development projects, welfare programs and other social spending are common areas of spending for cuts; in many countries, austerity measures have been associated with standard of living declines.
Private banks, or institutions like the International Monetary Fund (IMF), may require that a country pursues an 'austerity policy' if it wants to re-finance loans that are about to come due. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.