IMF APPROVES EXPANSION OF BORROWING ARRANGEMENTS
The International Monetary Fund says it has approved a 10-fold increase in its funding arrangements and transformed its premier standing credit arrangement.
It said that the gesture was to ensure a more flexible and effective tool of crisis management.
A statement issued by the IMF, which was made available to the News Agency of Nigeria in Lagos on Tuesday, said that the decision was arrived at in a meeting of its board on Monday.
It said that as a result of the expansion, IMF had increased its resources available for lending to its members from about $500bn to about $550bn.
'This expansion was in response to the call by the leaders of the Group of 20 economies, endorsed by the International Monetary and Financial Committee,'' it stated.
It said that 13 new participants, including a number of major emerging market economies, had indicated their willingness to join in the 'New Arrangements to Borrow.''
NAN reports that NAB is a standing set of credit arrangements under which participants commit resources to IMF lending when needed to supplement quota resources.
According to IMF Managing Director, Mr. Dominique Strauss-Kahn, the decision follows the agreement reached by current and prospective participants at their meeting in Washington in November 2009.
The expansion and enlargement of the NAB provides a very strong multilateral foundation for the Fund's efforts in crisis prevention and resolution, as an essential back-stop to the Fund's quota resources.
This will help ensure that the Fund has access to adequate resources to help members that are vulnerable to financial crises.
The statement said that the expanded NAB would become operational when it received formal acceptances from the required proportion of current and potential participants, which would require legislative backing in some cases.
'The fund is, and shall remain, a quota-based institution. It is important now that member countries rapidly take the necessary steps to make the increased resources available,' Strauss-Kahn said in the statement.
According to the statement, the recent unprecedented shock confronting the global economy has led to a sharp increase in the demand for IMF financing.