IMF approves new modalities for bilateral borrowing

The Executive Board of the International Monetary Fund (IMF) on June 15, 2012 approved the modalities for bilateral borrowing, which will allow the Fund to significantly boost its available resources to address the global economic crisis.

According to the IMF, during it’s Spring Meetings in April 2012, member countries pledged to increase the IMF’s resources by over $430 billion and “today’s decision by the Executive Board establishes the modalities for member countries to make these resources available through bilateral loan or note purchase agreements between each creditor country, or its central bank, and the IMF”.

The modalities were similar to those used for bilateral borrowing by the Fund in 2009/10 and for the expanded New Arrangements to Borrow (NAB).

The Board envisages that the IMF would only draw on the new agreements after it has committed most of its existing quota and NAB resources.

Members’ claims on the IMF under the agreements can be counted as part of their international reserves, and the IMF will repay any amounts drawn with interest, the statement noted.

By Ekow Quandzie