Saturday, June 6, 2009

The IMF Response to the Global Crisis

The role of the IMF in this whole global turmoil has not been properly addressed. The International Monetary Fund (IMF) will build upon ongoing efforts to respond rapidly and boldly to the needs of countries during the current global crisis. The IMF will continue to mobilize commitments for increased resources, complete the overhaul of the Fund’s lending framework, further strengthen the quality of its surveillance, and consider reforms in the key area of the Fund’s own governance.
Crisis Response

The Fund will strengthen the global financial safety net by taking steps to boost its resources further, strengthen its concessional lending capacity, and adapt its lending tools for low-income countries. It will also monitor and analyze the policy responses by member countries to cope with the impact of the crisis, consider the key issues that countries will have to deal with upon exiting from the crisis and ensure that Fund-supported programs enable countries to restore stability as effectively as possible.

Indeed, the IMF has mobilized on many fronts to support its member countries, increasing its lending, using its cross-country experience to advise on policy solutions, and introducing reforms to modernize its operations and become more responsive to member countries’ needs.The Fund has responded quickly to the global economic crisis, with lending commitments reaching a record level of $157 billion, including a sharp increase in concessional lending to the world’s poorest nations.As part of moves to support countries during the global economic crisis, the IMF is beefing up its lending capacity and has approved a major overhaul of how it lends money by offering higher amounts and tailoring loan terms to countries’ varying strengths and circumstances.

Fund Resources and global liquidity

The Fund is seeking to expand and make more flexible the New Arrangements to Borrow (NAB) through discussions with members that are participants and potential participants in the NAB. At the same time, the Fund is working with members to ensure that recent pledges are turned into bilateral loan agreements and quickly brought to the Board for approval. In addition, the Executive Board will soon discuss documents to allow the Fund’s first issuance of notes to its members, or their central banks, which will also bolster the Fund’s capacity to provide timely and effective financial assistance to its members. Furthermore, the Executive Board will discuss proposals for expanding the Fund’s concessional lending capacity. The Board is also expected to consider a proposal to implement a general allocation of Special Drawing Rights (SDRs) to members in an amount equivalent to US$250 billion.

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