## GENERAL ARRANGEMENTS TO BORROW

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**Canonical URL:** [GENERAL ARRANGEMENTS TO BORROW](https://www.imf.org/-/media/files/publications/pp/2017/pp122617-general-arrangements-to-borrow.pdf)

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### Background and legal framework
- The General Arrangements to Borrow (GAB) was established in 1962 as a standing agreement between the Fund and 11 participants to supplement the Fund’s quota resources.
- The GAB decision requires periodic renewal and that decisions on renewal must be taken one year prior to expiration.
- The last renewal became effective in December 2013; a renewal decision would need to be adopted not later than December 25, 2017.
- The associated borrowing arrangement with Saudi Arabia was entered at the time of the SDR 17 billion increase in 1983 for an amount equivalent to SDR 1.5 billion.

### Trends in use and relative importance
- The GAB’s size has remained unchanged since 1983 at SDR 17 billion and has fallen sharply relative to quotas and the NAB.
- The GAB has not been activated in almost 20 years; the last activation was in July 1998 (amount SDR 6.3 billion, SDR 1.4 billion drawn) in connection with financing an extended arrangement for Russia.
- The role of the GAB changed in 1998 with establishment of the New Arrangements to Borrow (NAB); a proposal for calls under the GAB may only be made when a proposal for the establishment of an activation period under the NAB is not accepted by NAB participants.
- Outstanding drawings and available commitments under the NAB and GAB cannot exceed the total amount of NAB credit arrangements. Following NAB and quota increases, combined quota and NAB resources amount to about SDR 658 billion.

### Outcome of consultations (November 28, 2017)
- Washington-based representatives of GAB participants unanimously agreed that, in light of its diminished usefulness, the GAB decision should be allowed to lapse at the end of the current period.
- Reasons noted by representatives:
  - The GAB’s importance as a backstop against potentially systemic shocks has declined substantially.
  - The GAB does not add to the Fund’s total resource envelope.
  - The GAB’s size has remained unchanged since 1983 and has fallen sharply relative to quotas and the NAB.
  - GAB resources can be called upon only in limited circumstances and GAB modalities are less flexible than under the NAB.
  - In practice, the GAB has not been activated in almost 20 years.

### Staff proposal and timing
- Staff proposes no further action by the Executive Board and that the GAB decision be allowed to lapse.
- If the Executive Board does not renew the GAB decision by the renewal deadline of December 25, 2017, the decision would remain in effect through the end of the current period (i.e., through December 25, 2018), after which it would lapse.
- The associated borrowing agreement with Saudi Arabia will also not be renewed and its term will end on December 25, 2018.
- A press release would be issued after the renewal deadline of December 25, 2017.

### Historical notes (Box 1)
- The GAB was increased to its current size of SDR 17 billion in 1983; at the same time the associated agreement with Saudi Arabia for SDR 1.5 billion was made.
- The GAB was last activated in 1998 for an amount of SDR 6.3 billion (SDR 1.4 billion drawn).
- Following the more than ten-fold expansion of the NAB in 2011 and the aggregate doubling of quotas under the 14th General Review in 2016 (and associated rollback of the NAB), combined quota and NAB resources amount to about SDR 658 billion.

### GAB participants and credit arrangements (In millions of SDRs)
- Belgium 595.0
- Canada 892.5
- Deutsche Bundesbank 2,380.0
- France 1,700.0
- Italy 1,105.0
- Japan 2,125.0
- Netherlands 850.0
- Sveriges Riksbank 382.5
- Swiss National Bank 1,020.0
- United Kingdom 1,700.0
- United States 4,250.0
- Total 17,000.0

*Prepared by the Finance Department in consultation with the Communications, Legal, and Strategy, Policy, and Review Departments; Report completed December 18, 2017.*

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_Source: https://www.imf.org/-/media/files/publications/pp/2017/pp122617-general-arrangements-to-borrow.pdf_