Review of Fund Facilities-Analytical Basis for Fund Lending and Reform Options
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Summary:
In the context of the ongoing review of Fund facilities, this paper examines the analytical basis for Fund lending in emerging market countries and provides a broad-ranging perspective for reforming the General Resources Account (GRA) lending toolkit.
The Fund’s important lending role in crisis prevention and resolution is buttressed by its unique characteristics: (i) its ability as a nonatomistic lender to provide large-scale financing and reduce the likelihood of a run by private creditors; (ii) its ability as a cooperative institution with near-universal membership to agree conditionality with members, thus providing national authorities with a policy commitment tool to underpin confidence and catalyze private lending; and (iii) its de facto preferred creditor status, which allows it to provide crisis financing when private creditors may be reluctant to lend.
Series:
Policy Papers
Subject:
Contingent credit lines Crisis prevention Economic models Emerging markets Fund facilities General Resources Account Lending commitments by Fund Use of Fund resources
English
Publication Date:
February 6, 2009
Format:
Paper
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