Press Release: IMF Announces Unprecedented Increase in Financial Support to Low-Income Countries
IMF News, July 29, 2009
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- Published: July 29, 2009
Overview and purpose
- Announcement date: July 29, 2009
- Press Release No.: 09/268
- Purpose: To sharply increase resources available to low-income countries in response to the global economic crisis, including measures to prevent millions from falling into poverty.
Major financial commitments and key figures
- Scaled-up concessional lending capacity: up to $17 billion through 2014.
- Initial tranche: up to $8 billion in the first two years.
- Comparison to G20 call: exceeds the G20 call for $6 billion in new lending over two to three years.
- Interest relief: zero payments through end-2011 on the IMF’s concessional facilities for all low-income members.
- Proposed general SDR allocation: $250 billion (Executive Board backed the Managing Director's proposal).
- Share for low-income countries from SDR allocation: more than $18 billion to bolster foreign exchange reserves.
- Mobilization needs to meet new commitments:
- Additional loan resources: SDR 9 billion from bilateral contributions.
- New subsidy resources: SDR 1.5 billion from IMF internal resources (including revenue from envisaged gold sales and bilateral contributions).
New lending instruments and their purposes
- Extended Credit Facility: provides flexible medium-term support.
- Standby Credit Facility: addresses short-term and precautionary needs.
- Rapid Credit Facility: offers emergency support with limited conditionality.
Concessionality, interest rates, and permanent changes
- The increase includes permanently higher concessionality of Fund financial support.
- A mechanism will be established for updating interest rates after 2011.
Program design, conditionality, and policy emphasis
- Greater emphasis on poverty reduction and growth objectives across all new lending instruments, including targets to safeguard social and other priority spending.
- Structural conditionality streamlined for all Fund-supported programs.
- Structural conditionality in medium-term, low-income country programs will become more flexible and focused on core goals tailored to each country.
- IMF-supported programs have accommodated larger fiscal deficits during the crisis in most low-income countries.
Rationale and expected impact
- The measures respond to the global crisis that has hit low-income nations hard, particularly in Sub-Saharan Africa.
- IMF Managing Director Dominique Strauss-Kahn characterized the package as "an unprecedented scaling up of IMF support for the poorest countries" and as a "historic set of actions" to help prevent increased poverty and support recovery.
Source: Press Release No. 09/268, July 29, 2009
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References
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- PRESS CENTER
- Podcast: More for the Poor
- Gold sale
- What's the result
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- Zero interest
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- Africa growth rate
- IMF Backs New Package To Support World's Poorest During Crisis
- The IMF Response to the Global Crisis: Meeting the Needs of Low-Income Countries
- The IMF and Low-Income Countries in the Global Crisis
- IMF Reforms Financial Facilities for Low-Income Countries
- IMF Support For Low-Income Countries
- https://www.imf.org/en/home