IMF lending hits record $30bn

Click to follow
The Independent Online
THE INTERNATIONAL Monetary Fund lent a record $30bn in the year to April 1999, according to its annual report, released today. The increase, due to the economic crisis in Asia, took the amount of Fund loans outstanding to more than $90bn, also a record.

New commitments to future lending increased too, to $43bn, with no sign two years after the start of the Asian crisis that demands for emergency financial support from the IMF are abating.

Despite these increased demands, a recently approved increase in member countries "quotas", or shareholdings, in the IMF mean it can afford to continue lending on an increased scale. Since the onset of the Mexican crisis at the end of 1994, certain richer member countries have also put in place the so-called "new arrangements to borrow", a $45bn facility for crisis loans.

The annual report focuses on the Fund's response to the financial crisis and to reform of what has become known as the international financial architecture. Increased transparency, on the part of both governments and the IMF itself, is portrayed as the key to averting future problems. In particular, the report highlights a pilot project to publish the IMF's annual assessments of member economies, always kept private in the past. "This is a major breakthrough," an official said.

About 40 countries have agreed to the publication of the annual "Article IV" reports and background papers. The IMF also makes available published economic and financial statistics for member countries on the Internet. Other architectural improvements include plans to strengthen financial systems in emerging markets and working with the World Bank. The annual IMF-World Bank meetings next week will take forward plans to strengthen the international financial system. Gordon Brown, newly appointed chairman of a key IMF policy committee, will play a crucial role.

The meetings are also due to finalise how best to use the IMF's gold reserves to raise the financing needed for the third world debt relief initiative. Earlier plans to sell 10 million ounces of the Fund's 103 million ounce gold reserves have been abandoned. A revaluation is likely instead, releasing other funds for investment.

News Analysis, page 17