Stepping up crisis lending. The IMF has overhauled its general lending framework to make it better suited to country needs and streamlined conditions attached to loans. Since the start of the crisis, it has committed more than $300 billion in loans to its member countries.

Helping the world’s poorest. In response to the global financial crisis, the IMF undertook an unprecedented reform of its policies toward low-income countries and quadrupled its concessional lending.

Creating a crisis firewall. While quota subscriptions of member countries are the IMF's main source of financing, the Fund can supplement its quota resources through borrowing if it believes that they might fall short of member countries' needs. Through the New Arrangements to Borrow (NAB), the IMF's main backstop for quota resources, a number of member countries and institutions stand ready to lend additional resources to the IMF. In addition, numerous member countries have pledged over $430 billion in additional bilateral commitments to further augment the IMF’s resources.

Sharpening IMF analysis and policy advice. The IMF’s monitoring, forecasts, and policy advice, informed by a global perspective and by experience from previous crises, are in high demand. The IMF is also contributing to the ongoing effort to draw lessons from the crisis for policy, regulation, and reform of the global financial architecture, including through its work with the Group of Twenty (G-20) industrialized and emerging market economies.

Reforming the IMF’s governance. In November 2010, the IMF agreed on wide-ranging governance reforms to reflect the increasing importance of emerging market countries. The reforms, expected to be effective by October 2012, also ensure that smaller developing countries will retain their influence in the IMF.

Reforming the IMF’s lending framework

In an effort to better support countries during the global economic crisis, the IMF beefed up its lending capacity and approved a major overhaul of how it lends money by offering higher amounts and tailoring loan terms to countries’ varying strengths and circumstances.

Credit line for strong performers. The Flexible Credit Line is a crisis prevention tool that provides large and upfront access to IMF resources. There are no conditions to be met once a country has been approved for the facility. The FCL was further enhanced in August 2010 to make it more predictable and flexible. Colombia, Mexico, and Poland have been provided combined access of over $100 billion (no drawings have been made under these arrangements).

Access to liquidity on flexible terms. Heightened regional or global stress can affect countries that would not likely be at risk of crisis. Providing rapid and adequate short-term liquidity to such crisis bystanders during periods of stress could bolster market confidence, limit contagion, and reduce the overall cost of crises. The Precautionary and Liquidity Line is designed to meet the liquidity needs of member countries with sound economic fundamentals but with some remaining vulnerabilities.

Reformed terms for IMF lending. Structural performance criteria have been discontinued for all IMF loans, including for programs with low-income countries. Structural reforms will continue to be part of IMF-supported programs, but have become more focused on areas critical to a country’s recovery.

Emphasis on social protection. The IMF is helping governments to protect and even increase social spending, including social assistance. In particular, the IMF is promoting measures to increase spending on, and improve the targeting of, social safety net programs that can mitigate the impact of the crisis on the most vulnerable in society.

Helping the world’s poorest

In response to the global financial crisis, the IMF undertook an unprecedented reform of its policies toward low-income countries. As a result, IMF programs are now more flexible and tailored to the individual needs of low-income countries, with streamlined conditionality, higher concessionality and more emphasis on safeguarding social spending.

Increase in resources. Resources available to low-income countries through the PRGT over the period 2009–2014 were boosted to $17 billion, consistent with the call by G-20 leaders in April 2009 of doubling the IMF’s concessional lending capacity and providing $6 billion additional concessional financing over the next two to three years. The IMF’s concessional lending to low-income countries amounted to $3.8 billion in 2009, an increase of about four times the historical levels. In 2010 and 2011, concessional lending reached $1.8 billion and $1.9 billion respectively.

More flexibility. Partly because of the crisis, the IMF has generally factored in higher deficits and spending in 2008 and 2009, and has made financial assistance programs more flexible. On average, for all of sub-Saharan Africa, fiscal deficits widened by about 2 percent of GDP in 2009.

Establishment of a Post-Catastrophe Debt Relief (PCDR) Trust. This allows the IMF to join international debt relief efforts for very poor countries that are hit by the most catastrophic of natural disasters. PCDR-financed debt relief amounted to $268 million in 2010.

Creating a crisis firewall

As a key part of efforts to overcome the global financial crisis, the Group of Twenty industrialized and emerging market economies (G-20) agreed in April 2009 to increase the resources available to the IMF by up to $500 billion (which tripled the total pre-crisis lending resources of about $250 billion) to support growth in emerging market and developing countries.

In April 2010, the Executive Board adopted a proposal on an expanded and more flexible New Arrangements to Borrow (NAB), by which the NAB was expanded to about SDR 367.5 billion, with the addition of 13 new participating countries and institutions, including a number of emerging market countries that made significant contributions to this large expansion. On November 15, 2011, the National Bank of Poland joined the NAB as a new participant, bringing the total to about SDR 370 billion (about $570 billion) and the number of new participants to 14 (once all new participants have joined).

In 2009–10, the IMF also signed a number of bilateral loan and note purchase agreements for a total of about SDR 180 billion. The amounts drawn under these agreements from NAB participants have been folded into the NAB.

In December 2011, euro area member countries committed to providing additional resources to the IMF of up to 150 billion euro (about $200 billion). Following the request of the IMF’s membership last year through the International Monetary and Financial Committee and the general support by the G-20 leaders at the Cannes summit, the IMF Executive Board discussed the adequacy of the Fund’s resources in January 2012, with a view to potentially increasing them through new bilateral borrowing. So far, member countries have pledged over $430 billion in additional resources.

The 14^th General Review of Quotas, approved in December 2010, will double the IMF’s permanent resources to SDR 476.8 billion (about $737 billion). It is targeted to become effective by the Annual Meetings in 2012. There will be a rollback in the NAB credit arrangements from SDR 370 billion to SDR 182 billion which will become effective when participants pay for their 14^th Review quota increases.

The general allocation of SDRs made in 2009 was equivalent to $250 billion and has resulted in a near ten-fold increase in SDRs. This represents a significant increase in reserves for many countries, including low-income countries.

Sharpening IMF analysis and policy advice

The IMF is closely working with governments and other international institutions to try and prevent future crises.

Risk analysis has been improved, including by taking a cross-country perspective, and an early warning exercise is being carried out jointly with the Financial Stability Board. Linkages between the real economy, the financial sector, and external stability are being analyzed. Work is also underway on mapping and understanding the Implications for surveillance and lending of rising financial and trade interconnectedness, including how financial and economic policies in one country can affect others.

The IMF is also providing advice on how to rethink global regulation and the supervision of markets.

Reform of IMF governance to better reflect the global economy

A top priority for the IMF’s legitimacy and effectiveness has been the completion of governance reform.

On December 15, 2010, the Board of Governors approved far-reaching governance reforms under the 14^th General Review of Quotas. The package includes a doubling of quotas, which will result in more than a 6 percentage point shift in quota share to dynamic emerging market and developing countries while protecting the voting shares of the poorest member countries. The reform will also lead to a more representative, fully-elected Executive Board.

To become effective, an amendment to the Articles of Agreement will need to be accepted by three-fifths of the member countries, having 85 percent of the total voting power and members having no less than 70 percent of total quotas on November 5, 2010 will need to consent to their quota increases.

The agreed package builds on quota and voice reforms agreed in April 2008 and became effective on March 3, 2011. Under these reforms, 54 members received an increase in their quotas—with China, Korea, India, Brazil, and Mexico as the largest beneficiaries. Another 135 members, including low-income countries, saw an increase in their voting power as a result of the increase in basic votes, which will remain a fixed percentage of total votes. Combined with the 14^th Review, the shift in quota share to dynamic emerging market and developing countries will be 9 percentage points.