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IMF seeks temporary cash injection to boost lending power

27 February 2009 09:57 (UTC +04:00)

Bakuâ€“ APA-Economics. The International Monetary Fund announced it will seek a temporary cash injection from members to boost its lending power to countries struggling with the global economic crisis, AFP reported.
The IMF executive board at a meeting this month reached a consensus "to temporarily supplement the fund’s resources to address the current crisis," the Washington-based institution said in a statement.
"There is also general consensus that official borrowing is the most promising approach," it added.
The IMF said the immediate priorities were to bring a borrowing agreement with Japan for 100 billion dollars to the board for approval, and to agree on the operational guidelines for the use of borrowed resources.
The board reached consensus after weighing an internal study on the IMF’s financial position amid the worst global financial crisis since the 1930s Great Depression and a rapidly shrinking world economy.
Reza Moghadam, director of the IMF’s strategy department and co-author of "Review of the Adequacy of and Options for Supplementing Fund Resources," said at a news conference that most directors had endorsed managing director Dominique Strauss-Kahn’s goal of doubling the fund’s lending capacity to 500 billion dollars.
Moghadam said the IMF’s current lending capacity stands at 150 billion dollars, after lending roughly 50 billion dollars to countries in distress in recent months.
"Our resources we feel are adequate for now," Moghadam said.
"Our attitude is to hope for the best but prepare for the worst," he added.
Moghadam said that judging from discussions with the Group of 20 developed and developing countries, he expected they "will be supportive of this aim" to boost IMF funds.
He said the IMF hopes to "make progress" on the matter ahead of the April 2 summit in London of the G20, which includes emerging powerhouses China, Brazil, India and Russia.
The emerging countries have long pushed for greater clout in the IMF and the World Bank to reflect their growing importance in the global economy.
In response to a question about whether China had discussed offering funds on condition of raising its quota in the 185-nation institution, Andrew Tweedie, the head of the finance department and co-author of the report, said: "We’re talking to all our members.... There’s no link between that and the quota.