WASHINGTON: The International Monetary Fund announced on Friday that 25 member states have committed a total of $340 billion in bilateral borrowing to maintain the Fund’s lending capacity.

This fund will cover a four-year period, expiring in December 2020.

“These commitments will preserve the overall lending capacity of the IMF and provide confidence that the Fund will continue to address the needs of our membership,” said IMF Managing Director Christine Lagarde.

“I am heartened that so many countries have already made a commitment, and I would encourage others to join this important international cooperative effort.”

The IMF will now follow a new framework, approved in August, for granting access to bilateral borrowing.

There are currently 35 agreements with creditors under the 2012 Borrowing Agreements for a total of $393 billion. These agreements, set to expire starting Oct 12, have not been drawn but have played a critical role as a third line of defence, after quotas and the New Arrangements to Borrow (NAB), in providing assurance to members and markets that the IMF has adequate resources to meet potential needs.

The new framework retains key modalities of the existing borrowing framework and includes a new multilateral voting structure that gives creditors a formal say in any future activation of the bilateral borrowing agreements.

The new agreements will have a common maximum term of end-2020, with an initial term to end-2019 extendable for a further year with creditors’ consent. The agreements under the new framework will continue to serve as a third line of defence after quotas and the NAB.

Agreements under the new framework will be submitted to the Executive Board for approval once these are concluded.

Published in Dawn October 8th, 2016