The former Yugoslav republic of Montenegro joined the IMF on January 18, becoming the institution’s 185th member. The Articles of Agreement were signed in Washington, D.C., by Ljubiša Krgović, President of the Council of the Central Bank of Montenegro. Montenegro’s Finance Minister, Igor Luksic, attended the signing ceremony.
The IMF was founded in 1944 and began with 45 member countries.
IMF Managing Director Rodrigo de Rato said that Montenegro’s membership marked “another decisive step in the process of nation building. Montenegro is claiming its place as a respected member of the global community of nations, and it is demonstrating its commitment to meet the responsibilities and reap the benefits of international cooperation.”
Montenegro’s initial quota in the IMF is 27.5 million Special Drawing Rights (SDRs) (about $41.2 million). With the admission of Montenegro, total members’ quotas in the IMF rise to SDR 216.75 billion (about $325.01 billion).
Each member country is assigned a quota, based broadly on its relative size in the world economy. A member’s quota determines its maximum financial commitment to the IMF and its voting power and also has a bearing on its access to IMF financing.
IMF working on Lebanon package
The IMF is working with Lebanese authorities to assemble an Emergency Post-Conflict Assistance (EPCA) program to support the strife-torn nation’s efforts to deal with its massive debt, rebuild and reform its economy, and undertake sound macroeconomic policies to maintain financial stability.
The IMF’s effort comes as major donor countries pledged on January 25 in Paris to provide about $7.6 billion in aid to help Lebanon rebuild following a month-long war last year between the Lebanese group Hezbollah and Israel, fought on Lebanese soil.
Under the EPCA program, the IMF works closely with donor organizations, such as the World Bank, and donor countries to provide technical assistance, economic policy advice, and financial assistance.
The 2006 war led to a substantial setback on the economic front. According to official estimates, infrastructure damage was around $2.8 billion. Real GDP, which was expected to grow by 5-6 percent in 2006, is estimated to have contracted by around 5 percent, which implies a loss of income of over $2 billion. Much productive capacity has been lost, and there has been a massive displacement of the population, including the exodus of many professionals.
Mohsin S. Khan, Director of the IMF’s Middle East and Central Asia Department, said the package would help Lebanon “significantly in implementing a comprehensive five-year reform program. Provided politics does not derail it, the program should enable Lebanon to develop into an efficient and dynamic services-oriented regional center. The donor financing will be phased over five years based on progress in completing the reforms.”
Peru to get precautionary new IMF loan
On January 26, the IMF approved a new loan for Peru totaling about $257.7 million (SDR 172.4 million), which Peru plans to treat as precautionary. The 25-month Stand-By credit will support the Latin American country’s economic program, including consolidating macroeconomic stability. The approval by the IMF’s Executive Board makes $238.6 million (SDR 159.6 million) immediately available.
The main objectives of the Fund-supported program are to build on the current economic expansion, enhance the poverty reduction strategy, strengthen the resilience and depth of the financial system, and press ahead with growth-enhancing reforms.
The new loan follows the early repayment to the IMF by several Latin American countries over the past few years.