Tuesday, participants of the International Monetary Fund's 'New Arrangements to Borrow' programme agreed to raise their crisis credit facility to $600 billion from $500 billion pledged previously.
The decision was taken in a meeting of the 26 current participants in the programme in Washington D.C. with representatives of 13 potential new participants. They also agreed to introduce more flexibility to the NAB, a standing set of credit arrangements under which participants commit supplementary resources for IMF lending when needed.
"Today's agreement on an enlarged NAB marks an important moment for multilateralism and the Fund, which will help the IMF's effectiveness in its response to crises and help strengthen the international financial architecture," IMF Managing Director Dominique Strauss-Kahn said.
"This commitment to deliver on the pledge made by G-20 leaders to contribute over $500 billion to an expanded and more flexible NAB demonstrates the continuing multilateral support for the Fund's response to both this and possible future crises," said Daisuke Kotegawa, the Chair of the NAB for Japan. "Current and potential NAB participants agreed to work quickly to take the necessary measures to make the new enhanced NAB effective as soon as possible."
NAB is a set of credit arrangements between the IMF and 26 member countries and institutions. The facility was proposed at the 1995 G-7 Halifax Summit following the Mexican financial crisis to provide supplementary resources to the IMF to help countries to deal exceptional situation.
The NAB has been activated once-to finance a Stand-by Arrangement for Brazil in December 1998, when the IMF called on funding of SDR 9.1 billion, of which SDR 2.9 billion was used.
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