Monday, August 29, 2011

IMF - IMF Standing Borrowing Arrangements NAB

IMF Standing Borrowing Arrangements
June 07, 2011

"While quota subscriptions of member countries are the IMF's main source of financing, the Fund can supplement its quota resources through borrowing if it believes that they might fall short of members' needs. Through the New Arrangements to Borrow (NAB), the IMF's main backstop for quota resources, a number of member countries and institutions stand ready to lend additional resources to the IMF.

The NAB is a set of credit arrangements between the IMF and a group of member countries and institutions, including a number of emerging market countries. The NAB is the facility of first and principal recourse in circumstances in which the IMF needs to supplement its quota resources. Once activated, it can provide supplementary resources of up to SDR 367.5 billion (about $586 billion) to the IMF.

The expanded NAB came into effect on March 11, 2011, and was activated shortly after for a period of six months, in the amount of SDR 211 billion (about $334 billion). The General Arrangements to Borrow (GAB) remains in force and can be used in limited cases.


"...The original NAB was proposed at the 1995 G-7 Halifax Summit following the Mexican financial crisis. Growing concern that substantially more resources might be needed to respond to future financial crises prompted participants in the Summit to call on the G-10 and other financially strong countries to develop financing arrangements that would double the amount available to the IMF under the GAB. In January 1997, the IMF’s Executive Board adopted a decision establishing the NAB, which became effective in November 1998...."

"...The NAB has been activated twice. First, 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. Second, on April 1, 2011 the Executive Board formally completed the process of activation, following the effectiveness of the expanded NAB on March 11, 2011 and a vote by NAB participants after going through their necessary internal procedures. The NAB was activated for six months in the amount of SDR 211 billion (about $334 billion) to increase the financing available to the Fund.
The NAB has been renewed twice, most recently in November 2007. The next review of the NAB is to take place by November 2011, and will take into account the proposed increases in quotas under the Fourteenth General Review...."


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