Participants in the International Monetary Fund's crisis credit facility agreed to expand it by up to $100 billion, add new contributing countries and make the facility more flexible, the IMF said on Tuesday. At a meeting in Washington, the 26 participants in the IMF's New Arrangements to Borrow (NAB), a standing loan fund for use in times of financial crisis, agreed to increase the credit arrangements to up to $600 billion from a previous pledge of up to $500 million.
The NAB members also agreed to add an unspecified number of new members from a pool of 13 potential new participants. A formal decision on expanding the NAB is expected to be taken by the IMF's executive board in coming weeks. "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," Japan NAB chairman Daisuke Kotegawa, said in a statement.
For the first time ever this year, emerging market countries such as China, Russia, India and Brazil, contributed toward the NAB facility. But they have made it clear that any future lending would depend on them acquiring a bigger stake in the way the IMF is run - a move that would shift power away from over-represented countries mainly in the industrialised world.
The emerging economies also want more say over how the resources in the NAB are spent. Kotegawa said the next review of the NAB facility would be conducted following the next review of quotas, or voting rights, in the IMF. The quota review is due to be completed by January 2011. Leaders of the Group of 20 industrial and emerging economies in April pledged immediate financing of $250 billion toward a $500 billion increase in NAB resources.
"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" said IMF Managing Director Dominique Strauss-Kahn said. Under the NAB agreement, the chair rotates annually among participants according to alphabetical order, with Japan transferring this position to South Korea.