Major Expansion of IMF Borrowing Arrangements Takes Effect, Boosting Resources for Crisis Resolution

Press Release No. 11/74
March 11, 2011

A ten-fold expansion of the International Monetary Fund’s New Arrangements to Borrow (NAB) took effect today together with reforms to make the NAB a more flexible and effective tool of crisis management. The expansion of the NAB was approved by the IMF on April 12, 2010 (see Press Release No. 10/145), and became effective following completion of the ratification process by NAB participants. The reforms increase the NAB from SDR 34 billion (about US$[53] billion]) to SDR 367.5 billion (about US$[576] billion) once all new participants have adhered to the expanded NAB, giving a major boost to the resources available for the International Monetary Fund (IMF) to lend to its members.

The NAB reform process began in response to the call by the leaders of the Group of 20 (G-20) economies at its April 2009 London summit, endorsed by the International Monetary and Financial Committee (IMFC), to increase the financing available to the Fund, through an expanded and more flexible NAB increased by up to US$500 billion. Thirteen new participants, including a number of major emerging market economies, have joined 26 participants in the previous NAB or are in the process of completing their domestic processes for adherence.

Background

The NAB is the IMF’s principal standing set of credit lines under which 39 members or their institutions are committed to provide supplementary resources to the IMF when these are needed to forestall or cope with a threat to the international monetary system. The NAB is supplementary to quota resources, which are made up of the quota subscriptions each country pays upon joining the Fund, broadly based on its relative size in the world economy. Under the 2008 quota and voice reform that became effective on March 3, 2011 (see Press Release No. 11/64), approved quotas of IMF members total SDR 238.3 billion (about US$[374] billion) and will rise to approximately SDR 476.8 billion (about US$747 billion) once the quota increase under the 14th General Review of Quotas agreed in late 2010 comes into effect—which is planned to be achieved by the Annual Meetings in late 2012. When the quota increase comes into effect, it is agreed that the NAB will be correspondingly scaled back, with details to be determined during the review of the NAB to be completed by mid-November 2011.

The recent unprecedented shock confronting the global economy led to a sharp increase in the demand for IMF financing. To ensure that the IMF continues to have sufficient resources to meet demand, leaders of the G-20 agreed in April 2009 that immediate financing from members of US$250 billion under bilateral borrowing agreements would subsequently be folded into an expanded and more flexible NAB, increased by up to $500 billion. This call was endorsed by the IMFC. Pending the effectiveness of the expanded NAB, member countries have pledged more than $300 billion in immediate bilateral financing.

Useful links

Factsheet: IMF Standing Arrangements to Borrow:

http://www.imf.org/external/np/exr/facts/gabnab.htm

Press Release April 12, 2010 “IMF Executive Board Approves Manor Expansion of Fund’s Borrowing Arrangements”: http://www.imf.org/external/np/sec/pr/2010/pr10145.htm

IMFC Communiqué April 25, 2009: http://www.imf.org/external/np/sec/pr/2009/pr09139.htm

Bilateral borrowing commitments: http://www.imf.org/external/np/exr/faq/contribution.htm

IMF Quotas: http://www.imf.org/external/np/exr/facts/quotas.htm

Where the Fund gets its Money: http://www.imf.org/external/np/exr/facts/finfac.htm


         
Participants and Amount of Credit Arrangements 1/
(in Millions of Special Drawing Rights)
 
 

 

Current Credit Arrangements   New Credit Arrangements  
 
 

Current Participants

       
         

Australia

801.29   4,370.41  

Austria

407.57   3,579.24  

Banco Central de Chile

340.00   1,360.00  

Belgium

956.60   7,861.85  

Canada

1,380.99   7,624.43  

Danmarks Nationalbank

367.01   3,207.78  

Deutsche Bundesbank

3,518.75   25,370.81  

Finland

340.00   2,231.76  

France

2,549.29   18,657.38  

Hong Kong Monetary Authority

340.00   340.00  

Italy

1,752.95   13,578.03  

Japan

3,518.75   65,953.20  

Korea

340.00   6,583.44  

Kuwait

341.29   341.29  

Luxembourg

340.00   970.59  

Malaysia

340.00   340.00  

Netherlands

1,301.85   9,043.72  

Norway

378.88   3,870.94  

Saudi Arabia

1,760.86   11,126.03  

Singapore

340.00   1,276.52  

Spain

664.77   6,702.18  

Sveriges Riksbank

849.76   4,439.74  

Swiss National Bank

1,540.26   10,905.42  

Thailand

340.00   340.00  

United Kingdom

2,549.29   18,657.38  

United States

6,639.83   69,074.27  

 

 

 

 

 

New Participants

       
         

Banco de Portugal

    1,542.13  

Bank of Israel

    500.00  

Brazil

    8,740.82  

China

    31,217.22  

Cyprus

    340.00  

Greece

    1,654.51  

India

    8,740.82  

Ireland

    1,885.52  

Mexico

    4,994.76  

New Zealand

    624.34  

Philippines

    340.00  

Russian Federation

    8,740.82  

South Africa

    340.00  
 

Total 2/

    367,467.36  
         

1/ Credit arrangements are subject to a minimum of SDR 340 million.

2/ Total may not equal sum of components due to rounding.

         


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