core sector communique

IMF Activates Expanded Borrowing Arrangements

April 1, 2011

The International Monetary Fund (IMF) announced today that its Executive Board has formally completed the process of activation of the expanded New Arrangements to Borrow (NAB), which became effective on March 11, 2011 . This follows a vote by NAB participants after going through their necessary internal procedures. The NAB is a standing set of credit lines under which 39 members or their institutions are committed to provide supplementary resources to the IMF. The total agreed size of the credit lines under the expanded NAB now amounts to SDR 367.5 billion (about US$581 billion). Pending the effectiveness of the expanded NAB, member countries had already pledged more than $300 billion of the total in immediate bilateral financing. Bilateral lines from NAB participants will no longer be used to finance new commitments, and outstanding balances under their bilateral lines may be folded into the NAB.

The NAB is supplementary to quota resources, which are made up of the quota subscriptions each country pays upon joining the Fund and in the context of quota increases thereafter, broadly based on its relative size in the world economy. The IMF is a quota-based institution, and the Fund’s Board of Governors has emphasized that each member of the Fund commits to use its best efforts to complete the steps required to make the quota increase under the 14th General Review of Quotas effective no later than the Annual Meetings in 2012. When the quota increase comes in to effect, quota resources will increase from a current approved level of SDR 238.3 billion (about US$377 billion) to approximately SDR 476.8 billion (about US$754 billion), and 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 activation of the NAB, which required the consent of participants representing 85 percent of total credit arrangements eligible to vote and the approval of the IMF’s Executive Board, followed the expansion of the NAB completed on March 11, 2011. The reforms also made the NAB a more flexible and effective tool of crisis management and responded to a call by the leaders of the Group of 20 (G-20) and endorsed by the International Monetary and Financial Committee (IMFC) to increase the financing available to the Fund. 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 to the expanded NAB.