The IMF yesterday announced the creation of a new Flexible Credit Line facility (FCL) to help countries with well-managed economies to weather the global financial crisis.
Lines of credit with no pre-defined upper limit will be made available to countries with "very strong fundamentals, policies, and track records of policy implementation," according to a Fund press statement. The loans will be repayable over a three and a quarter to five year period.
The new facility replaces a short-term liquidity facility announced last October that was never taken up amid complaints about restrictions on the amount of funds available and tight repayment schedules.
"These reforms represent a significant change in the way the Fund can help its member countries – which is especially needed at this time of global crisis," said IMF Managing Director Dominique Strauss-Kahn. "More flexibility in our lending along with streamlined conditionality will help us respond effectively to the various needs of members. This, in turn, will help them to weather the crisis and return to sustainable growth."
The FCL facility is aimed at emerging economies and medium income countries. IMF First Deputy Managing Director John Lipsky said that new provisions for making finance available to low income countries would be announced in the coming months.
The Fund also said that conditions attached to all its loan programs were being streamlined. The IMF has been heavily criticized in the past for imposing severe loan conditions that have damaged the interests of borrowing countries.
The Fund statement acknowledged that "In the past, IMF loans often had too many conditions that were insufficiently focused on core objectives."
The IMF also said it was seeking to boost its resources in the run-up to the April 2 London G20 summit, and welcomed Japan’s provision of an additional US$ 100 billion and the EU's commitment to provide US$ 75 billion.
(China.org.cn March 25, 2009)