IMF grows third world lending scheme to $600 billion
The International Monetary Fund announced Tuesday that a lending scheme to aid countries hit hard by the financial crisis had grown to 600 billion dollars.
The Washington-based Fund said that an additional 13 potential countries had agreed to join 26 nations in committing money to the so-called New Arrangements to Borrow (NAB), which was originally targeted at 500 billion dollars.
They also vowed to bring more flexibility to the NAB, a standing set of credit arrangements under which participants commit supplementary resources for IMF lending when needed.
“Today’s agreement on an enlarged NAB marks an important moment for multilateralism and the Fund, which will help the IMF’s effectiveness in its response to crises and help strengthen the international financial architecture,” said IMF Managing Director Dominique Strauss-Kahn.
Additional flexibility introduced in the lending scheme is designed to make it an “effective tool of crisis management as a backstop for the international monetary system,” an IMF statement said.
The IMF executive board is expected to make a formal decision on the expanded NAB in the coming weeks.
The global financial crisis sparked by a home mortgage meltdown in the United States has led to a sharp increase in demand for IMF financing.
To ensure that the IMF continues to have sufficient resources to meet demand, the Group of 20 emerging and developed economies committed in September to triple its available resources, up from a pre-crisis level of about 250 billion dollars.
G20 leaders agreed in April that immediate financing of 250 billion dollars from members would subsequently be folded into an expanded and more flexible NAB, increased by up to 500 billion dollars.
Among the countries that contributed to the scheme are developed nations such as the United States, Britain, France, Japan and Italy and developing states like China, Brazil and India.