Courtesy of The Shocked Investor
This news came directly from the I.M.F. today. It approved a ten-fold expansion of the Fund’s New Arrangements to Borrow (NAB), or between $500B and $550B. About $100B will come from the U.S. (just $0.1T, pocket change for the printing presses).
And we thought the economic crisis had been fixed.
The I.M.F also annoucned that the ‘credit arrangement’ will also change into into ‘a more flexible and effective tool of crisis management’. One also wonders what this means.
This represents a major increase in the resources available for the Fund’s lending to its members.
According to the P.R,. 13 new participants, many emerging countries, indicated their desire to join 26 current participants in the NAB.
Dominique Strauss-Kahn, IMF Managing Director says
“The expansion and enlargement of the NAB borrowing arrangements provides a very strong multilateral foundation for the Fund’s efforts in crisis prevention and resolution, as an essential back-stop to the Fund’s quota resources. This will help ensure that the Fund has access to adequate resources to help members that are vulnerable to financial crises,”
"The NAB is a standing set of credit arrangements under which participants commit resources to IMF lending when these are needed to supplement quota resources. The expanded NAB will become operational when it receives formal acceptances from the required proportion of current and potential participants, which will require legislative backing in some cases.
The expansion of the NAB will make an important contribution to global financial stability, but it is not a substitute for a general increase in the Fund’s quota resources. The Fund is, and shall remain, a quota-based institution. It is important now that member countries rapidly take the necessary steps to make the increased resources available,” Mr. Strauss-Kahn underscored." I.M.F. today